Federal Budget 2020-21: FinTech focus
With the release of the 2020-21 Federal Budget on 6 October 2020 (Budget), we're highlighting some of the key measures aimed at supporting startups, FinTech and blockchain. With literally thousands of pages dedicated to going over every aspect of the Budget in detail, we will only be summarising some of the key decisions.
The Budget allocates a further $419 million to fund the development and implementation of the Modernising Business Registers program, which is aiming to streamline interactions with government by combining the dozens of disparate registers into one location. Here's hoping this has the desired effect of making it easier to start, run and close a business (and for me to undertake due diligence). Over the next two years, the Government will invest $256 million in the expansion of its Digital Identity system and will provide an additional $9.6 million for fintech trade and investment flows. Part of the Modernising Business Register program involves the introduction of director identification numbers, discussed in more detail here.
At a federal level, e-invoicing will become mandatory for all agencies by 1 July 2022, with over 80 per cent of invoices being able to be received electronically by 1 July 2021. A further $11.4 million will be invested into a new Regtech Commercialisation Initiative, ambiguously intended to "make it easier for businesses to comply with regulations".
Announced soon before the publication of the Budget was released, the Budget confirmed that $6.9 million has been allocated over two years from 2020-21 to support industry-led pilots to demonstrate the application of blockchain technology to reduce regulatory compliance costs and encourage broader take-up of blockchain by Australian businesses. These pilots were discussed by Chloe White and Steve Valles at the recent Blockchain Masterclass hosted by Swinburne University, and represent the biggest investment the Federal Government has made to date in the sector.
Cyber Security Strategy
The Budget also provides for an additional $201.5 million to deliver the 2020 Cyber Security Strategy. As part of the Strategy, among other initiatives, the Government has planned to invest $128.1 million to counter cybercrime and $37.7 million in developing Australia’s cyber security skills.
Simplification of Export Market Development Grants
The popular Export Market Development Grants Scheme (EMDG) is being "simplified and reoriented" to more effectively support export-ready small and medium enterprises. This change was expected, and aims to implement the recommendations of the independent review of the EMDG scheme.
Tax guru Will Fennell has summarised the key tax measures in the Budget better than we ever could, which you can read here.
Responses from the startup and tech community has been mixed overall, but the reception to the tax changes has been generally positive. Speaking on the changes to the R&D Tax Incentive, CEO of StartupAUS Alex McCauley said:
This is a critical time to be encouraging companies to invest in future growth. The R&D Tax Incentive does just that, so we strongly welcome the Treasurer’s announcement tonight that the scheme will get a $2 billion injection.
Echoing the above sentiment, CEO of Fintech Australia Rebecca Schot-Guppy said:
The Digital Business Plan ticks most of our wishlist and pulls all the right levers to help bolster the fintech industry. It includes support for the CDR rollout, helping fintechs expand into overseas markets, a review into the payments landscape and investing in a digital business register, and e-invoicing measures.