The Australian government revealed its response to the financial systems inquiry today and buried within the document was provisioning for “crowd-sourced equity crowdfunding “. The long anticipated move by the government is part of the innovation agenda in the financial sector.
Final guidelines for equity crowdfunding are anticipated before the end of the year. The document called equity crowdfunding an “urgent priority” and one that was dearly needed to “support the funding needs of early stage innovators”.
Australia was an early innovator in the investment crowdfunding space with the advent of ASSOB, a platform that has raised over $144 million for early stage companies to date. The recent rule making push has been designed to ease and liberalize current regulations to make equity crowdfunding more accessible to a wider audience. Several new platforms are poised to leverage forthcoming rules.
The government stated that a review regarding debt based crowdfunding will be conducted simultaneously.
Questions remain as to the tax status of crowdfunding and is an outstanding item. In a report earlier this month published on Lexology, the statement was made that there has been minimal focus on the taxation treatment of equity crowdfunding.
The current government made an election promise to review the entire Australian financial system back in October of 2010. The most recent response, led by Treasurer Scott Morrison and Minister for Small Business Kelly O’Dwyer, is another step in what has been a long policy-making journey. The statement by the government notes the overall importance of finance to Australian citizens as it is the largest sector of industry in the Aussie economy having contributed $139 billion over the past year and employing approximately 400,000 Australians.
The outlined agenda is based on the following parameters;
- strengthen the resilience of the financial system;
- improve the efficiency of the superannuation system;
- stimulate innovation in the financial system;
- support consumers of financial products being treated fairly; and
- strengthen regulator capabilities and accountability.
The government believes innovation is key to a robust future economy. Policy makers see facilitating entrepreneurship as vital for job creation and economic growth.
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