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The sophisticated investor test

See the requirements to meet the sophisticated investor test.

Last updated 6 April 2021

Under the Corporations Act 2001External Link, 'sophisticated investors' who meet certain requirements don't have to be provided with a disclosure document, such as a prospectus or product disclosure statement, when being offered shares in a company.

You may be a sophisticated investor if you:

  • (or, if you are a company or trust, your controller under the Corporations Act 2001) hold a certificate issued by a qualified accountantExternal Link that confirms you (or your controller) meet certain asset and income requirements and the certificate is provided no more than six months prior to the qualifying shares being offered to you. As at 19 March 2020, this certificate is available only if you (or your controller) have gross income of at least $250,000 for each of the last two financial years or net assets of at least $2.5 million
  • have paid at least $500,000 for the qualifying shares (either as a single offer or including any amounts you previously have paid for shares of the same class that you hold in the same company)
  • are offered the qualifying shares through a financial services licensee who is satisfied that you have previous investment experience that allows you to assess the offer and you sign a written acknowledgement that the licensee hasn't given you a disclosure document in relation to the offer
  • meet the requirements of being a 'professional investor' under the Corporations Act 2001 (such as a financial services licensee), or
  • have or control gross assets of at least $10 million (including any assets held by an associate or a trust that you manage).

As a sophisticated investor, your investments are eligible for the early stage investor tax incentives and are not restricted to the amount you can invest in an ESIC in an income year. However, your early stage investor tax offset is capped at a maximum amount of $200,000 for each income year.