Boost skills and software tax breaks to lift fintech: report
It also called for a public report on additional safeguards on the use of the government’s flagship consumer data right policy by big international tech companies, which has been a concern for the major banks.
However, the bipartisan report is mostly encouraging about the opportunity for Australia amid the rapid globalisation of fintech and data rights, calling for the country to lead the establishment of international open banking standards.
It also backs the introduction of “nudge mechanisms” into the local CDR regime, a suggestion of comparison site Finder, to help drive customer adoption.
War for talent
The report calls for more permanent residence visa options for skilled IT entrepreneurs and wants the government’s Global Business and Talent Attraction Taskforce to target specific countries to lure fintech talent.
Afterpay CEO Anthony Eisen was among tech leaders who told the committee Australia needed to turn its successful COVID-19 response into a weapon in the emerging global war for software engineering talent.
On tax, the report says the Research & Development Tax Incentive needs new methodologies to ensure software developers can use it, and it should be quarterly. Given confusion over software eligibility, it also recommends setting up a separate software-specific tax incentive scheme.
Many submissions to the inquiry were highly critical about R&D eligibility. Atlassian, KPMG, the Australian Small Business and Family Enterprise Ombudsman, not-for-profit organisation StartupAUS and national association FinTech Australia all said legal changes pushed through last year were insufficient. Many companies said they would use the incentive to pay software workers.
“Canberra is a long way from the market in general terms, which is magnified in nimbler sectors like fintech,” Senator Bragg said. Tax, regulation, culture, capital and skills “remain the building blocks for a successful tech-based economy, whether it be in fintech, agriculture or advanced manufacturing”, he added.
Other tax recommendations include calls for the government to consider abolishing interest withholding tax in line with recommendations from a review by Mark Johnson conducted in 2009.
Over the next few months, the committee will consider other tax issues, including whether the capital gains tax regime is forcing crypto token trading offshore.
The inquiry has been extended to consider digital asset and neo-banking policy and will deliver a final report in October. The Australian Securities and Investments Commission last week called for clarity on which digital tokens fall within its “regulatory perimeter”.
The second interim report examines capital-raising policy and calls for an Australian scheme based on the US Rule 10b5-1 as an option to provide company founders with a more transparent path to exiting shareholdings, a move that has support of tech founders such as Mike Cannon-Brookes, Richard White and Leigh Jasper.
Bid for transparency on priorities
It also calls for measures to ensure technology drives an equitable deal for retail shareholders “by modernising the rights issuance system” and amending existing laws “to require post-capital-raising disclosure from listed companies”.
Given the pace of change, the committee wants government to be more flexible and transparent on tech policy priorities, including providing more information on the National Blockchain Roadmap implementation, evaluation and future directions.
The national cabinet should consider supporting a “blockchain land registry initiative” as a pilot project for a co-operative approach to regulatory technology, it says.
The committee also calls for the establishment of a Commonwealth “rules as code innovation hub”, to advance legal coding approaches to federal laws and regulation. Commonwealth Bank said on Tuesday rules as code could help it design a digital compliance platform.
Governments should also be reviewing business access to information from government registers, including those held by ASIC and the Australian Electoral Commission, to streamline digital identity checks.
The committee’s first interim report, released in September last year, made 32 recommendations. The government never responded to the report but it adopted some initiatives in the October budget, including around telehealth, digital identity and the consumer data right.
It moved some responsibilities into Treasury, which could be a precursor to establishing a new national body to consolidate regulatory responsibilities in relation to the implementation of the CDR and data policy, as recommended in the committee’s first report and supported by the major banks and fintechs.
Data policy was a focus of The Australian Financial Review Government Services Summit on Wednesday.