Give biotechs a break: tax study

Biotechs need better tax breaks, according to a new report.

The report - Growing Our Economy Nation - Proposals for Further Reform - was prepared by Ernst and Young in association with the Committee for Melbourne, the BioMelbourne Network and the Victorian government's Department of State and Regional Development.

It says that the Federal government should adopt a prescribed industry approach to the development of knowledge-based industries, and outlines a series of proposed tax reforms for biotechnology and similar knowledge-based companies.

Such reforms are vital for Australia to be able to compete as a world-leading knowledge-based economy, the report claims. Biotechnology has already been recognised by the government as a major part of any knowledge-based economy.

The recommendations include tax breaks aimed at attracting and retaining skilled personnel, improving access to capital and ensuring that biotech companies attract appropriate funding during the development of the company from a start-up to a profitable entity.

Keith Hardy, a tax partner with Ernst and Young and one of the authors of the report, said that Australia was currently aiming at competitive neutrality with other countries.

"Neutrality is not good enough," he said. "We need to go beyond neutral to provide a positive incentive.

"If you are looking to be a world leader, it is not going to happen without positive stimulation of the marketplace.

"We have a competitive advantage in research, but not in commercialisation."

Without tax reforms, Australia would not be able to compete against other industrialised countries, Hardy said.