Cliff Parker, John Salvaris and Rachel Kuttner outline some opportunities and tax considerations for organisations interested in entering the global space sector.
The recent budget decision to invest $41 million in an Australian Space Agency, commencing 2018-19, including $15 million dedicated towards Australian business competitiveness in the global space economy is a modest first step for Australia which is the last Organisation for Economic Co-operation and Development (OECD) country to establish a Space Agency for commercial purposes.
It is an important step towards Australia playing a more active role in the global space market which is valued at approximately A$450 billion per annum globally and around $3-4 billion in Australia.
This has renewed interest and focus on how Australian entities will develop and benefit from the growth of the space industry and the tax implications for these entities. Sectors likely to be impacted by the space industry growth include agriculture, mining, communications, financial services (insurance, superannuation funds and investment funds), not for profits and government.
There are currently strategic investments into satellite-based positional, navigation and timing capabilities which may encourage support and investment by these industries. This investment provides a wealth of opportunities for new and existing Australian and international businesses.
There are many tax matters which interested parties will need to consider when investing into the space industry. Some of the matters which should be considered include:
Taxation laws specifically relating to the space industry and exploration activities are currently at a preliminary stage. However, with the State of California revenue authority taxing the launch of rockets based on distance travelled over California airspace, a future precedent for new taxes to be raised may have been set. At present, it appears that a launch site may be constructed in Arnhem Land, Northern Territory.
With an industry growing at approximately 9.7 percent per annum globally, now is the perfect time for our nation to reach for the stars!