The bill that focuses on “changing tax laws for start-ups was introduced on March 16, 2016.
The bill introduced by Hon Scott Morrison MP claims to amend the taxation laws to implement a range of new incentives to drive economic growth and jobs in the transitioning economy.
The Government anticipates on their website that the incentive will be available for investments in companies that:
- Undertake an eligible business (scope to be determined)
- That were incorporated during the last three income years
- Aren’t listed on any stock exchange
- Have expenditure and income of less than $1 million and $200,000 in the previous income year respectively.
The scheme is based on the successful UK Seed Enterprise Investment Scheme which raised over AUD$500 million in start-up investment for almost 2,900 companies in its first two years.
AMENDMENTS CONTAINED IN THE BILL:
Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to provide tax incentives for early stage investors and specially to encourage new investments.
In Australian early stage innovation companies with high growth potential by providing investors, who invest in such companies, with a tax offset and a capital gains tax exemption for their investments.
Schedule 2 to this Bill amends the early stage venture capital limited partnership (ESVCLP) and venture capital limited partnership (VCLP) regimes within the Venture Capital Act 2002 and Income Tax Assessment Act 1997 to improve access to venture capital investment and make the regimes more attractive to investors.
The amendment also provides 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.
The scheme will commence from 1 July, 2016 as soon as amendment receives royal assent.