In accordance with its announced (2015) innovation tax incentives policy, the government legislated to improve tax incentives for investments in early stage projects.
Legislation for these measures applies from 1 July 2016.
- for early stage investors:
- a 20% non-refundable carry forward tax offset on investments in qualifying companies (capped at $200,000 per investor per year);
- a 10 year exemption on capital gains tax, provided investments are held for 12 months or more.
- for Early Stage Venture Capital Limited Partnerships:
- investors receive a 10% non-refundable carry forward tax offset on capital invested
- the maximum fund size for new and existing ESVCLPs increased from $100 million to $200 million along with a number of reforms made to the income tax treatment of venture capital more generally.
Guidelines
Tax incentives for early stage investors.
The ATO has developed guidance to help determine whether a company meets Early Stage Innovation Companies principles-based innovation test.
To review the guidance see here.
Amendments – from 1 July 2018
The government has legislated tax amendments to the FinTech and innovation legislation to ensure access for finance and insurance ventures and to implement minor technical adjustments. See:
- Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018
- Venture Capital – changes to treatment of FinTech
- ESVCLPs and VCLPs can make fintech investments — sort of
Reporting
ESICs are required to report annually on qualifying investments under the tax incentives arrangements no later than 31 July for the immediately preceding financial year. See Business Portal for reporting details.
Further information:
- TD 2019/D5 Income tax: tax incentives for early stage investors: what is an ‘expense’ that is ‘incurred’ for the early stage test?
- Article (July 9, 2018): Investment perks for investors in ESICs
- Article (March 29, 2017): Tax Incentives in Australia For Innovation
- ATO – ESVCLP tax incentives and concessions
- Minister’s media release 15 March 2016
- Policy announcement December 2015
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This page was last modified 2019-08-28
