Tax Planning Strategy 151 | 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. Further details are available at National Innovation & Science Agenda.
The tax incentives 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 capital gains tax exemption provided investments are held for at least one year and less than ten years.
The tax incentives will only be available for investments in companies that:
- Satisfy a 100-point innovation test or are companies that are genuinely focused on developing for commercialisation new or improved products, processes services or methods and can demonstrate that certain requirements in relation to the commercialisation of the innovation are satisfied (for example, that the business related to the innovation has a high growth potential, and the company has the potential to scale its activities to take advantage of the growth potential).
- 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.
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