Innercode

when there is a gold rush, its a good time to be in the shovel business. It's uncertain what the return will be on the AI companies. But the chip companies, electricity companies, data centre companies sure will do well out of this.

Well they have certainly tried before:

https://en.wikipedia.org/wiki/Sam_Dastyari#Chinese_influence...

While the US will always be dominant, there are some advantages for Australian Tech companies to take advantage of:

Cheaper tech teams with less competition. Australia has a lot of talent in the software space, but without the eye watering wage bills. Even in the most expensive cities of Sydney and Melbourne, software developers generally cost a lot less than in the Bay Area. You can get even better value if you can build your team outside of Sydney/Melbourne.

You can build more slowly, there is alot less pressure to build grow fast and fail type startups. While venture capital heavy startups are the most celebrated in the press, there are plenty of great smaller scale self/revenue funded startups that can build up over time. Most of our celebrated tech successes built their business models over a long time and focused on building a good business first.

There are also great incentives to keep the development team in Australia. As a pre revenue startup you can get over 43.5% of your development cost back through the R&D Tax Incentive. While its a tax incentive, the way that they designed it was to provide tax refunds to loss making companies. Plus there are other great grants/incentives you can also take advantage of. (disclaimer: I'm a consultant for software startups/companies in this area)

The best course of action is to take a global approach, don't limit yourself to selling or developing in only one location.

This may well be the biggest attempt ever to get out at the right time

The R&D Tax scheme is a mix of law, tax and accounting. Like representing yourself in a legal matter or doing your own tax return, if its simple and straightforward you might be ok to claim yourself.

However add a little complexity here or there and it helps to have someone who knows what they're doing to guide you through it. Its a self assessment scheme, like tax, anyone can lodge their own return and the ATO will pay out with only cursory checks.

The real danger lies when you get audited, it can be especially dangerous for startups who have been claiming a few years, ignorant that they have not been claiming properly and are faced with an Audit by the ATO for multiple years of tax refunds. Generally once you add penalties to the tax refunds they must now pay back, the amount will end most startups.

There are many reputable consultants in this space who are capable and cheaper than the big 4. I would suggest sticking to the big 4, Tier 2 Accounting firms and Boutique R&D Tax Firms. They should be registered tax agents and generally you would want to know if they have successfully navigated Ausindustry Reviews and ATO audits before. Avoid suburban accountants like the plague for these things.

Still working for Vector 5!

Cheers, Andrew

The R&D Tax Incentive was designed to give a cash benefit for startups who have little tax to pay. So your example is correct for a pre revenue entity, assuming no outstanding tax liabilities. Its an entitlement scheme, so as long as your doing R&D, have a company and spending your money through the company, you will get the benefit of the scheme.

It is one area that Australia has a significant advantage over the US for startups.

I'm a consultant in the R&D Tax space. The press release relates to an advanced finding, which is an advanced approval of R&D activities. It does not however guarantee approval for the amount of expenditure they would be claiming. A tax refund of that size would naturally attract the attention of the Australian Tax Office(ATO). The press release is also dated before they could submit their tax return to obtain a 14/15 refund. A key problem with the press release is that there is now a $100million cap on how much expenditure they can claim in a financial year, so theoretically their maximum benefit would be $45million.

$120million in software R&D is a very large spend in Australia for one year, Google Australia for example claims about $40-$50million in R&D spend each year. Atlassian and some of the larger banks would claim a similar amount. I have not heard much about DeMorgan before, however if it all checks out they would be one of the most significant powers in the Australian tech space.

They could have a one sized fits all operating system, however they need to tailor the interface to each type of device. Using a mouse on a "touch" interface is a terrible experience, same as using touch in a mouse environment. I have not tried Windows 8 update, however first impressions have done the damage to Windows 8 already.

I really like the idea. We have used similar sites for web and graphic design (i.e. 99designs) with great results. I wonder what the average 30 second ad would cost using this model? My experience with other "competition" sites is that they will become heavily dominated by people in low wage countries such as India, Philippines, eastern Europe etc. as the prices are driven down.

As a tax practitioner working with software companies and their owners I have come to the conclusion that the Australian tax system is very hit and miss. The base rates for corporate tax and capital gains tax are high. There are some real tax traps laying around such as Division 7A which can inadvertently cause major issues.

However for startups, the tax system can work very well for you if you make full use of it. The recent changes to the R&D Tax Incentive have made it very popular with startups as it can fund up to 45% of the development costs. Every year I see many five and six figure tax refund cheques go to software startups that don't have significantly large revenue.

Once you get larger, the tax & other benefits of offshoring are undeniable. I would expect that Atlassian will keep their development teams in Silicon Valley and Australia, who can still benefit from the better access to capital and valuations from outside of Australia.