Startup investors could lose out on tax discounts at the drop of a hat as uncertainty around Labor's tax changes lingers, businesses say.
Plans to preserve softer tax settings for startups and entice research and development were announced on Friday, but the response from the tech sector has been lukewarm.
Financiers can now make unlimited gains while still being taxed half the normal rate - a discount previously only applied to gains of up to $10 million.
They also only need to invest for three years, down from five when Labor first floated the carve-outs.
A company as old as 15 years, up from 10, can now be considered a startup, but the maximum allowed turnover of $50 million has not budged.
But what exactly will count as an innovative enterprise remained a mystery, sparking anxiety certain tech sector segments would be left out.
"A tax incentive wrapped in uncertainty is not much of an incentive," FinTech Australia chief executive Rehan D'Almeida said in a statement.
"You cannot ask investors to take a long-term risk on an Australian startup while offering them a concession that can disappear halfway through the journey.
“There is also a more fundamental problem in allowing an investor’s tax treatment to change because the company later evolves its business model, restructures or fails an administrative requirement."
While it welcomed the government jettisoning the $10 million cap and relaxing companies' age requirements, the Tech Council of Australia's view on changes to a tax credit for enterprises investing in research and development was mixed.
Investments which only support research and development, rather than directly facilitate it, no longer count for the tax credit, and the incentive will now only apply to firms 10 years old or younger.
"We have a lot of catching up to do on R&D," the group's chief executive Kate Cornick said.
"Removing eligibility for supporting R&D activities and limiting access to refundable offsets to companies less than 10 years old risks limiting the benefit of those changes.”
It's the latest round of adjustments since a fiery campaign mounted by startups and entrepreneurs forced Labor to give the federal budget's tax changes a face lift in June, reinstating some concessions for small businesses and emerging firms.
