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T8 Early stage investor 2024

Complete question T8 to claim the early stage investor tax offset.

Published 28 May 2024

Things you need to know

You may be able to claim the early stage investor tax offset if one or both of the following applies:

  • you are entitled to the early stage investor tax offset in 2023–24
  • you have an amount of unused early stage investor tax offset carried forward from a previous year.

Are you entitled to claim an early stage investor tax offset?

To qualify for this tax offset there are requirements that need to be satisfied by:

  • you as the investor, and
  • the early stage innovation company.

For more information on the early stage investor tax offset and the requirements to qualify for it, see Qualifying for the tax incentives.

The maximum offset (including current year and carried forward prior year amounts) that you, and your affiliates combined, can claim in 2023–24 is $200,000.

If you are a partner in a partnership or a beneficiary of a trust which has invested in an early stage innovation company during 2023–24, you may be entitled to an early stage investor tax offset. The partnership or the trustee of the trust must provide you with written notification of your entitlement to the early stage investor tax offset. If a written notification has not been provided, contact the partnership or the trustee.

This tax offset is non-refundable, however you can carry it forward if it is not fully utilised in 2023–24. Any amount of unused tax offset able to be carried forward will be shown on your notice of assessment for the year ended 30 June 2024.

Working out your tax offset carried forward from a previous year

Your notice of assessment or amended notice of assessment for the year ended 30 June 2023 should show if you have any unused early stage investor tax offset that is carried forward to 2023–24.

Do you have an amount of unused early stage investor tax offset shown on your notice of assessment or amended notice of assessment for the year ended 30 June 2023?

The unused early stage investor tax offset carried forward from the previous year may need to be adjusted for any net exempt income. Exempt income is explained in Amounts that you do not pay tax on 2024.

The unused early stage investor tax offset carried forward from a previous year is reduced by $0.30 for every dollar of unused net exempt income, provided you had taxable income for that year. Unused net exempt income is any net exempt income left after deducting any tax losses of earlier income years from that year's net exempt income.

If you have unused net exempt income and are unsure how to calculate the early stage investor tax offset carried forward from a previous year, contact us. Otherwise, read on.

The amount of your unused early stage investor tax offset will help you to complete Step 5 when working out your 2023–24 tax offset.

Working out your 2023–24 tax offset

Follow the steps below.

Step 1

Work out the total amount you paid for eligible shares in all early stage innovation companies in 2023–24.

If you don't meet the requirements of the 'sophisticated investor' test for at least one of your 2023–24 investments in an early stage innovation company, your Step 1 amount must not exceed $50,000.

If your step 1 amount exceeds $50,000 you can't claim this offset.

Step 2

Multiply the amount from Step 1 by 20%.

Step 3

Identify your entitlements to any early stage investor tax offsets as a beneficiary of a trust or a partner in a partnership that has invested in an early stage innovation company during 2023–24.

Step 4

Add together the amounts from Step 2 and Step 3.

Step 5

Subtract from $200,000 the amount (if any) of unused early stage investor carried forward tax offset that you calculated in Working out your tax offset carried forward from a previous year.

Step 6

If the Step 4 amount is equal to or less than the amount worked out at Step 5, then the Step 4 amount is your 2023–24 tax offset.

If the Step 4 amount is greater than the Step 5 amount, then the Step 5 amount is your 2023–24 tax offset.

Your 2023–24 tax offset amount may need to be further reduced if any of your affiliates are entitled to the early stage investor tax offset (whether for investments they made in 2023–24 or carried forward from 2022–23).

The maximum offset (including current year and carried forward prior year amounts) that you, and your affiliates combined, can claim in 2023–24 is $200,000.

Example: calculating your current year tax offset if you have an amount of tax offset carried forward from the previous year

Alex has a carried forward early stage investor tax offset of $60,000 from 2022–23.

In 2023–24, Alex invested $500,000 in eligible shares in one early stage innovation company, and $250,000 in another. Alex meets the requirements of the sophisticated investor test for the investments. The tax payable on Alex's taxable income (before applying tax offsets) is $180,000. Alex has no other offsets and no exempt income.

The amount that is recorded at question T8 – label O is $60,000. Alex calculates the amount to report at question T8 – label L as:

Step 1: The total amount paid for eligible shares in early stage innovation companies in 2023–24 = $750,000 ($500,000 + $250,000).

Step 2: Multiply the step 1 amount ($750,000) by 20% = $150,000.

Step 3: Nil – Alex has no other early stage investor entitlements via trusts or partnerships.

Step 4: Alex adds the amounts from steps 2 and 3. The result is $150,000.

Step 5: Alex subtracts the amount at question T8 – label O ($60,000) from $200,000. The result is $140,000.

Step 6: As the step 4 amount ($150,000) is greater than the amount worked out in step 5 ($140,000), Alex writes $140,000 at question T8 – label L.

Alex can claim an early stage investor tax offset equal to the sum of the question T8 – labels L and O amounts ($60,000 + $140,000, totalling $200,000). Although the carried forward tax offset from 2022–23 of $60,000 and the current year tax offset of $150,000 (step 4 amount) equal $210,000, Alex's total tax offset is capped at $200,000 for 2023–24. The unused excess of $10,000 cannot be carried forward to 2024–25.

As Alex's entitlement to the tax offset ($200,000) is greater than the gross tax payable on taxable income ($180,000), the unused portion of the tax offset ($20,000) may be carried forward to future years.

End of example

Completing your supplementary tax return

Write the result from Step 6 at question T8 – label L. Don't show cents.

Write the amount of unused early stage investor tax offset carried forward from the previous year, reduced by any net exempt income, at question T8 – label O. Don't show cents.

Where to go next

 


QC101455