The Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 received Royal Assent as Act No. 54 of 2016.
This act effects the following amendments:
- It would amend the ITAA 1997 to encourage new investment in Australian early stage innovation companies with high growth potential by providing investors, who invest in such companies, by providing tax incentives.
- These incentives include a 20% carry-forward non-refundable offset on investments capped at $200,000 per year, and a 10-year exemption on CGT for investments held in the form of shares in the innovation company for at least 12 months, provided that the shares held do not constitute more than a 30% interest in the innovation company. The tax offset will be available upon investment, not when the funds are used by the innovation company, and
- There will also be a 10-year exemption on CGT for investments held in the form of shares in the innovation company for at least 12 months, provided that the shares held do not constitute more than a 30% interest in the innovation company. , and any sale of the shares will be taxed on a “deemed capital account” basis.
- These amendments form part of the tax incentive for early stage investors measure. DATE OF EFFECT: These amendments would apply in relation to shares issued on or after the later of 1 July 2016 or Royal Assent.
- Amends the early stage venture capital limited partnership (ESVCLP) and venture capital limited partnership (VCLP) regimes within the Venture Capital Act 2002 and ITAA 1997 to improve access to venture capital investment and make the regimes more attractive to investors. The amendments provide an additional tax incentive for limited partners in new ESVCLPs; relax restrictions on ESVCLP investments and fund size and clarify the legal framework for venture capital investment in Australia. Under the changes, there would be:
- a non-refundable tax offset of 10% of the value of new capital invested into early stage venture capital limited partnerships during the income year;
- an increase in the maximum fund size of early stage venture capital limited partnerships from $100 million to $200 million;
- improved access to funding from managed investment trusts; and
- broadened and simplified rules for both venture capital limited partnerships and early stage venture capital limited partnerships.
- DATE OF EFFECT: The amendments would broadly apply on and after 1 July 2016. However, the ESVCLP tax offset will be available for any qualifying contributions made to ESVCLPs that become unconditionally registered on or after 7 December 2015 ie the date the measure was announced in the Government’s Innovation Statement.
[APH website] [APH – Bill as passed] [APH – EM] [TT article] [LTN 82, 3/5/16] [LTN 84, 4/5/16] [LTN 85, 5/5/16]