Treasury Laws Amendment (2017 Measures No 1) Bill 2017 introduced – changes 2016 ‘Innovation’ measures, so that investors through an interposed trust can access to CGT concessions; ASIC/ATO info sharing 

The Government introduced the Treasury Laws Amendment (2017 Measures No 1) Bill 2017 was introduced in to the House of Reps on Thursday16.2.2017.

It proposes to:

• make minor technical changes to the ITAA 1997 to ensure the National Innovation and Science Agenda measures contained in Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 operate in accordance with their original policy intent. The amendments seek to ensure that investors that invest through an interposed trust are able to access the capital gain concessions provided by the tax incentives for early stage investors and venture capital investment measures. DATE OF EFFECT: The amendments relating to the tax incentives for early stage investors measure would apply to CGT events occurring on or after 1 July 2017. The amendments relating to the venture capital investment measure would apply in relation to payments made on or after 1 July 2016;
• amend the Australian Securities and Investments Commission Act 2001 to allow ASIC to more readily share confidential information with the Commissioner of Taxation. DATE OF EFFECT: The day after Royal Assent.

[LTN 30, 16/2/17] [APH website – 2017 Measures No. 1; Innovation Bill/Act]

Summary of the effect of the Innovation Act

The Innovation Act a Amends the:

1. Income Tax Assessment Act 1997, Income Tax Assessment Act 1936 and Taxation Administration Act 1953 to:
   1. create an early stage investor regime that provides tax incentives for qualifying investors through a non-refundable tax offset and capital gains tax exemption on innovation related investments;
   2. require early stage innovation companies to report on specific innovation related investments; and
   3. provide a mechanism for Innovation Australia to provide guidance about whether particular investment activities are ineligible activities;
2. Income Tax Assessment Act 1997 to:
   1. provide non-refundable carry-forward tax offsets for limited partners in early stage venture capital limited partnerships (ESVCLP);
   2. provide for a capital gains tax exemption for fixed and unit trust beneficiaries of partners in ESVCLPs; and
   3. exclude small entities from eligible venture capital investment auditor requirements;
3. Venture Capital Act 2002 to increase the maximum fund size for ESVCLPs to $200 million;
4. Income Tax Assessment Act 1997 and Venture Capital Act 2002 to:
   1. remove the requirement that an ESVCLP divest an investment in an entity once the value of the entity’s assets exceeds $250 million;
   2. provide that an entity can invest in another entity and remain an eligible venture capital investment; and
   3. enable foreign venture capital funds of funds to hold more than 30 per cent of the committee capital of an ESVCLP and extend their access to capital gains tax and other income tax concessions in relation to eligible venture capital investments; and
5. Income Tax Assessment Act 1936 and Taxation Administration Act 1953 to enable a managed investment trust to disregard its investment in, and through, an ESVCLP or venture capital limited partnership when determining if it is a trading trust.