The general anti-avoidance provisions in Part IVA of the Income Tax Assessment Act 1936 may apply to schemes that are used to access the tax incentives for early stage investors, including both the tax offset and the modified capital gains tax treatment.
These rules apply to prevent taxpayers from obtaining tax benefits by entering into contrived or artificial arrangements to access the tax incentives. Where the conditions in Part IVA are satisfied, the Commissioner of Taxation can cancel the relevant tax benefits.
For more information, see Taxpayer Alert TA 2024/1 Early stage investor tax offset claimed using circular financing arrangements.