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Tax Incentives for Early Stage Investors

Malcolm Turnbull’s Innovation Statement released on 7th December 2015 provides tax incentives for early stage investors. The tax incentives will encourage early stage investment in innovative start-ups and should boost growth by fostering new enterprises and promoting entrepreneurship.

The tax incentives will apply from 1st July 2016 and provides concessional tax treatment for investors including:

  • A 20% non-refundable tax offset on investments, capped at $200,000 per investor per year.
  • A 10 year exemption on capital gains tax, provided investments are held for three years.

The tax incentives will only be available for investments in companies that:

  • Undertake an eligible business (details to be advised).
  • Were incorporated during the last three income years.
  • Are not listed on any stock exchange.
  • Have expenditure of less than $1 million in the previous income year.
  • Have income of less than $200,000 in the previous income year.

In addition, partners in early stage venture capital funds will also receive a 10% tax offset on the capital invested during the year. The tax concession is limited to funds with assets of less than $200 million.

Further details are available at National Innovation and Science Agenda.