• 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 2001 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.

    The Treasury Laws Amendment (2017 Measures No. 1) Bill 2017 was introduced into Parliament 16 February 2017. These amendments make technical corrections to ensure the Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 operates in accordance with the original policy intent.

    See also:

      Last modified: 22 Feb 2017QC 48430