This begins a major transformation of Australian business by allowing companies and directors to take "necessary risks to innovate".
The policy embraces the risk of failure, in order to allow innovation to succeed. This means recognising that, in pursuing new ideas and opportunities, unfortunately, some businesses will fail.
The reforms announced by the government will help change the Australian business culture. The key components of the announcement, as they relate to businesses, include:
- Introducing a "safe harbour" for directors from personal liability for insolvent trading if they appoint a restructuring adviser to develop a turnaround plan for the company.
- Making "ipso facto" clauses, which have the purpose of allowing contracts to be terminated solely due to an insolvency event, unenforceable if a company is undertaking a restructure.
- Reducing the current default bankruptcy period from three years to one year.
- Tax incentives for "angel" investors providing funding to start-ups.
- Favourable changes to tax treatment for the acquisition of intangible assets such as patents, trademarks and copyrights.
- Changes to disclosure requirements for employee share schemes.
- Additional investment through the creation of a Cyber Security Growth Centre.
- New laws that make it easier for companies to access crowd-sourced equity funding.
- Changes to the tax treatment of Early Stage Venture Capital Limited Partnerships (ESVCLPs) to attract more investment into start-ups.
Download our special factsheet for our in-depth commentary on how the Innovation Statement will affect small and medium enterprises.
Follow Collins Hume on Twitter: @CollinsHume, take part in the Collins Hume conversation on LinkedIn: Collins Hume, join us on Facebook: www.facebook.com/CollinsHumeAccountantsBusinessAdvisers, or check us out on Google+: google.com/+CollinshumeAu/posts