For Start-Ups: Recent tax announcements affecting Fintech

The Federal Government has announced further tax concessions for start-up companies and expanded venture capital tax concessions amending the existing early stage venture capital limited partnership (ESVCLP) and venture capital limited partnership (VCLP) regimes (generally with effect from 1 July 2016).

Eligible investors that acquire, either directly or indirectly via a partnership or trust, equity interests issued on or after 1 July 2016 who is categorised as an Australian early stage innovation company (ESIC) may receive a non-refundable carry-forward tax offset of 20% of the value of their investment subject to a maximum offset cap amount of $200,000. As a further benefit, such investors will have no realised capital gains on equity interests in qualifying ESICs that have been held for between one and ten years.

The amendments will provide a new non-refundable carry-forward tax offset for limited partners in ESVCLPs, equal to up to 10 per cent of contributions made by the partner to the ESVCLP, increase the maximum committed capital for ESVCLPs from $100 million to $200 million and remove the requirement that an ESVCLP divest an investment in an entity once the value of the entity’s assets exceeds $250 million.