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Tax incentives for innovation

Tax incentives are available for eligible investors.

Last updated 31 May 2023

Early stage investors

From 1 July 2016, if you invest in a qualifying early stage innovation company (ESIC), you may be eligible for tax incentives for early stage investors. The incentives provide eligible investors who purchase new shares with a:

  • non-refundable carry forward tax offset equal to 20% of the value of their qualifying investments (which is capped at a maximum tax offset amount of $200,000)
  • modified capital gains tax (CGT) treatment, under which
    • capital gains made or accrued on qualifying shares that are continuously held for at least 12 months and less than 10 years are exempt from CGT
    • capital losses made or accrued on shares held less than ten years are also disregarded.

Venture capital investors

A range of tax concessions are available for venture capital and early stage venture capital limited partnerships.

From 1 July 2016, limited partners of new early stage venture capital limited partnerships (ESVCLPs) may be entitled to claim a 10% non-refundable carry-forward tax offset to encourage new investment by reducing the effective cost of these kinds of investments.

Also from 1 July 2016, changes have been made to clarify existing arrangements and allow a wider range of investment activities for both new and existing ESVCLPs and venture capital limited partnerships.

Detailed information about tax incentives for innovation.