For a country that prides itself on fairness the proposed tax benefits for investors in startups are surprisingly unfair.
Unless you are a professional investor with $2.5m in assets or more you can’t qualify for these new tax reductions for innovation investments [introduced to Australian parliament March 18, 2017] .
The operative words here are obviously ‘high risk’. Sure tech startup investing is risky, but so is a lemonade stall with 50c drinks.
But risk diversification is precisely why we need more people to invest to share the risk more widely. And of course simple fairness.
More importantly, a lot of the people who make super early stage investors are what they call family, friends and fools (in the nicest possible way). These people are prepared to risk it because they know the founders usually personally and usually for a long time, they can see the confidence they bring relative to an entrepreneur’s previous endeavours.
And they are best placed to decide their own risk profile, not a bureaucrat.
Of course benevolent rules for protection do serve a purpose, seat belts and road speed limits come to mind. But even they are fairly applied to everyone.
So why not make the investment criteria something more fair, more level, more consistent and less discriminatory.
Speed limits are not applied differently to Mercedes and cheaper brands. The choice of car investment is the choice of the individual not a bureaucrat.
Likewise investments in risky investments should be capped e.g. at 20% of income until you qualify as a professional investor.
Pictured are one of our member’s teams, as a tech startup their recently launched app Diet Duo helps people live a healthy life anywhere in the world. The government should be the same, help, inform and guide fairly, don’t tell people what they can and can’t do without exceptional reasons for doing so.