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VCLP tax incentives and concessions

Venture Capital Limited Partnership (VCLP) gains and losses for foreign limited partners and general partners.

Last updated 30 November 2016

A VCLP is taxed on a 'flow-through' basis. Income and gains made by the VCLP will flow-through to the investors (the limited partners) and will be subject to tax treatment in the hand of the investors.

For tax concession enquiries, phone us on:

  • 13 28 66 within Australia
  • +61 8 8208 1847 from overseas.

Foreign limited partners

Gains and losses made on the disposal by the VCLP of eligible venture capital investments are not assessable or deductible and are disregarded for capital gains tax purposes if all the following apply:

  • The VCLP had owned the investment for at least 12 months.
  • You are a limited partner in the VCLP and you are a foreign resident.
  • You are either exempt from tax in your country of residence or if you are not exempt you have provided less than 10% of the VCLP's committed capital.

General partners

The carried interest of a general partner is the partner's entitlement to a distribution from the VCLP, normally contingent on profits attained for the limited partners in the VCLP. Carried interest does not include a management or similar fee that the partner is entitled to or a distribution attributable to an equity investment by the partner.

If you are a general partner of a VCLP, your entitlement to a payment of carried interest will be taxed as a capital gain rather than as income. If you qualify for the CGT discount, it applies to carried interest if you became a general partner at least 12 months before the CGT event happened.