AusBiotech welcomes industry agenda as a win for common sense

Long-awaited restoration in the tax treatment of employee share schemes (ESS) and the announcement that Australian manufacturers of medical devices will be able to register routine medical devices using certification from European bodies were amid the changes that AusBiotech warmly welcomed when the government released its Industry Innovation and Competitiveness Agenda (IICA).

The CEO of AusBiotech, Dr Anna Lavelle, said: “Both are changes that AusBiotech has been advocating for many years and we are reassured to see the government is listening to industry’s views about how to give Australian technology start-ups a fair go and for home-grown technology to be more internationally competitive.

“The reversal of the ESS, altered in 2009, and the ability for Australian companies to rely on regulatory processes undertaken by European notified bodies are big wins for common sense.

“Australian companies have for many years been frustrated by an inability to incentivise innovation employees with shares and options, and separately by a need to repeat expensive regulatory processes that do not increase safety but instead results in delays and unnecessary cost,” said Dr Lavelle.

AusBiotech was also pleased to see biotechnology at the core of the country’s promising sectors, with three of eight relevant (‘medical technologies and pharmaceuticals’, ‘food and agribusiness’ and ‘advanced manufacturing’) and recognised as growth sectors with competitive strength.

AusBiotech looks forward to further details on the plan to establish five Industry Growth Centres, three of which relate to biotechnology. AusBiotech also welcomes the focus on the government’s $9.2 billion annual investment in research to get a better commercial return, in particular, strengthening IP and improving tax and research funding arrangements to deliver incentives for the translation of our research and for collaboration with industry, and the establishment of the Commonwealth Science Council.

AusBiotech is hopeful that these steps are followed by further actions to support innovation, entrepreneurship and translation of research and looks forward to the Tax White Paper, which it is hoped will include a tax incentive for Australian innovation and manufacturing to be internationally competitive.

The government has advised that “the agenda’s ambitions will be developed over the longer term” and is hosting a series of roundtables over coming months to consult stakeholders, including industry. AusBiotech will update members as more information is released.

The Competitiveness Agenda and key fact sheets can be found here, while more information regarding the Industry Growth Centres is available here. The Minister for Industry will consult industry on the implementation of the centres, which will be rolled out from early 2015.

Regulatory change for medical devices

The IICA says the government will adopt the principle that if a system, service or product has been approved under a trusted international standard or risk assessment, Australian regulators should not impose any additional requirements unless it can be demonstrated that there is good reason to do so. All Commonwealth Government regulatory standards and risk assessment processes will be reviewed against this principle, but as a first step, the government will enable Australian manufacturers of medical devices to register routine medical devices using conformity assessment certification from European notified bodies.

The proposed change removes the requirement for Australian manufacturers of most medical devices and IVDs to obtain a TGA-issued conformity assessment certificate. This will place Australian manufacturers on the same footing as overseas manufacturers by allowing them to choose between obtaining their conformity assessment certificates from the TGA or from a European Notified Body.

Employee Share Schemes

The government will improve the tax treatment of Employee Share Schemes from 1 July 2015, with particular benefits for start-ups.

The government will reverse for all companies the changes made in 2009 to the taxing point for options, while retaining the integrity provisions that were introduced at that time. The existing up-front tax concession, which exempts from income tax the first $1000 of ESS interests given to an employee who earns less than $180,000 per annum, will also be retained.

A further concession will also be made available to eligible start-ups, which will allow them to issue to their employees options under certain conditions or shares at a small discount, and have taxation deferred until sale or the small discount exempt from tax. The shares or options would need to be held for at least three years. Criteria will be applied to define eligible start-ups, including turnover of not more than $50 million, being unlisted and being incorporated for less than 10 years.

The Treasurer will consult with industry to ensure that the draft legislation delivers the intended outcome, with the legislation intended to come into effect for shares or options provided from 1 July 2015.