Oz tax reforms signal research boost for academia

High-tech start-ups originating in universities may benefit from a sweeping reform of the Australian tax system.

The Australian government's decision to scrap capital gains tax for Australian and some foreign pension funds putting money into Australian venture capital investments could mean a Aus$1billion-plus boost to venture capital in Australia, said Andrew Green, executive director of Australian Venture Capital Association Ltd.

Much of this could benefit university academics seeking funds to turn their research ideas into innovative new businesses, he said.

"Complying pension funds from the United Kingdom, the United States and certain other countries can now place money here in Australia for effectively zero rate of capital gains tax. It puts us on a par with other places around the world," said Mr Green.

Overseas pension funds and investors have until now largely avoided investing in Australian start-ups because of higher tax rates than at home, while many Australian research ideas have only received investment once they were taken abroad.

"We have 7,000 Australians working in Silicon Valley," said Mr Green.

He added: "They should be here employing Australians. This will make Australia a much more attractive place to be for bright academics."

Education minister David Kemp said of the change: "Australian researchers will now find it easier to attract the venture capital investment they need to bring the results of their research to the marketplace."

But John Mullarvey, acting executive director of the Australian Vice Chancellors' Committee, though welcoming the capital gains tax exemptions that he said would create the climate for a greater level of venture capital investment, warned it was unlikely to herald a great flood of venture capital from offshore.

"People in Europe are a long way away," he said.