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  • New tax incentives for early stage investors

    On 5 May 2016, the Tax Laws Amendment (Tax Incentives for Innovation) Act 2016, which includes the tax incentives for early stage investors, received Royal Assent.

    The tax incentives provide concessional tax treatment for investments made in a range of innovative start-up companies with high growth potential.

    The tax incentives provide investors with:

    • a 20% non-refundable carry-forward tax offset for qualifying investments, capped at $200,000 for each investor and their affiliates (combined) per year, and
    • an exemption from capital gains tax (CGT) for qualifying investments held between one and ten years (capital losses on investments held for less than ten years must be disregarded).

    Investors who do not meet the requirements of the sophisticated investor test under the Corporations Act 2001External Link can only access these tax incentives if their total investments in one or more innovative start-up companies do not exceed $50,000 in an income year.

    The new tax incentives apply to investments made on or after 1 July 2016.

    Technical amendments to early stage investor regime

    As part of the Mid-Year Economic and Fiscal Outlook 2017-18, the Government announced they would make a series of minor technical amendments to the tax incentives for the early stage investor regime.

    The amendments to the income tax law will clarify the operation of various caps and investment requirements, as well as clarify how the incentive interacts with other parts of the tax law. The amendments will ensure the provisions operate in accordance with their original policy intent and provide greater certainty.

    The amendments have been introduced into Parliament as part of the Treasury Laws Amendment (2018 Measures No.2) Bill 2018 with an application date of 1 July 2018.

    Legislation and supporting material

    The Treasury Laws Amendment (2018 Measures No.2) Bill 2018External Link was introduced into Parliament on 8 February 2018.

    The Treasury Laws Amendment (2017 Measures No. 1) Act 2017External Link received Royal Assent on 4 April 2017. This made technical corrections to ensure the Tax Laws Amendment (Tax Incentives for Innovation) Act 2016External Link operates in accordance with the original policy intent.

    More information

      Last modified: 15 Mar 2018QC 48430