The Australian Government incentivises investors to support innovative, high-growth potential startups with investor tax incentives.
Details of the tax incentives available to investors:
An eligible investor can access:
- A 20 per cent non-refundable carry-forward tax offset on investment, capped at $200,000 per investor, per year.
- A 10 year capital gains tax exemption for qualifying investments held for at least twelve months.
What does this actually mean for eligible investors?
- Reduce tax payable in the year of the investment by up to $200,000
- No tax on the capital gain if you hold the investment for at least a year and exit the investment within 10 years
Who is eligible for investor tax incentives?
To be eligible for the incentives, an investor must meet the 'sophisticated investor' test under the Corporations Act 2001. The basis of this test is that the investor has either net assets to the value of $2.5 million and/or gross income for the past two financial years of at least $250,000 per year. Proof of qualification of meeting this test comes in the form of a certificate from a qualified accountant.
In the case the investor does not meet this test, their total investment in qualifying companies must be $50,000 or less for that income year.
Accessing investor tax incentives
A qualified 'sophisticated investor' can receive their tax benefit when they invest in an Early Stage Innovation Company (ESIC).
Learn more about gaining an ATO private ruling to become a verified ESIC here.
See more information about investor tax incentives here.