FinTech Australia is calling for an urgent recalibration of Research and Development tax incentives (RDTI) and the Early Stage Venture Capital Limited Partnership (ESVCLP) Program in its submission to treasurer Jim Chalmers ahead of the federal budget next week
The peak body’s 21-page pre-Budget submission makes 11 recommendations to Treasury, arguing that with the right support, fintech can lay the foundations for Australia’s digital economy, help reduce the cost of living through smarter financial solutions, and cement its role as a driver of innovation and productivity across the nation.
“Early-stage fintechs and startups are navigating a funding crisis that risks undermining Australia’s fintech innovation ecosystem,” the submission warns recommending targeted enhancements to R&D tax incentives, the ESVCLP Program, and the Enhanced Regulatory Sandbox to reduce barriers.
Other recommendations including better funding for regulators such as ASIC, APRA, the ACCC and AUSTRAC, expanding the Consumer Data Right (CDR), strengthening cybersecurity and fraud prevention, streamlining the fintech talent visa pathway to attract global expertise, while also upskilling local workers, supporting AI and emerging technologies, and expanding the National Reconstruction Fund to support fintech and enabling capabilities.
FinTech Australia CEO Rehan D’Almeida said Australia is currently at risk of creating a two-speed fintech ecosystem, where larger players continue to grow, but smaller startups that could be the next Afterpay or Up Bank are struggling.
“We’re seeing this play out across the available funding data. While it’s taking more time, more established fintechs are still securing funding,” he said.
“Meanwhile, early-stage fintechs — many of whom are flying under the radar — are struggling to find investment. This is where government intervention can have the greatest impact.”
“This is especially concerning as the sector embraces AI, and early, innovative fintechs are beginning to find new opportunities to improve financial literacy and competition in Australia.”
“We continue to hear reports from founders that Australia’s R&D tax incentive system is too complex and too time consuming for early stage founders. The Government’s Strategic Examination of Research and Development, announced as part of the 2024-25 Budget is an opportunity to change this for the better.”
D’Almieda said FinTech Australia also wants to see the overlapping compliance frameworks managed by multiple agencies be simplified to enhance the potential of the digital economy , and there needs to be a refocus on fintech as a key international export, with a call to renew the sector’s partnership with Austrade.
Fintech’s peak body also wants an urgent review of the Enhanced Regulatory Sandbox to ensure it’s fit for purpose.
“With ongoing uncertainty abroad, now is the best time to focus on our strengths and reinforce our fintech ecosystem with the correct policy settings,” D’Almieda said.
“Australia is a leading country for fintech. Many of the financial technologies we use daily in Australia are not available in other developed countries. With a refreshed focus on the sector it could become a vital export for our country.”
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