The government’s new startup tax incentives have been revealed

Denham Sadler /

The federal government has introduced a range of new tax incentives to parliament aimed at encouraging further investment in early-stage startup ventures.

The startup tax incentives, initially announced as part of December’s $1 billion innovation statement, will “help to drive investment, economic growth and jobs in our transitioning economy by encouraging innovation, risk taking and an entrepreneurial culture in Australia”, Treasurer Scott Morrison says in a statement.

“The government has been listening carefully to stakeholders during the development of these measures,” Morrison says.

“We have consulted widely with investors, industry bodies, universities and the startup community to incentivise innovation and reward greater risk taking while also maintaining the integrity and sustainability of the tax system.”

The Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 provides “concessional tax treatment to investors to promote investment in innovative, high-growth potential startup companies”.

The bill will be introduced into Parliament on Thursday.

It includes a 20% tax offset on investments in these qualifying companies, with a cap of $200,000 per year, per investor.

A 10 year exemption from the capital gains tax will also be available for investment held for more than a year.

The amendments also include changes to Early Stage Venture Capital Limited Partnerships (ESVCLPs), with the maximum fund size for new and existing ESVCLPs increased to $200 million.

Investments through an ESVCLP will also receive a 10% carry forward tax offset.

A discussion paper released early this month on the tax incentives included controversial aspects such as the definition of an “innovation company” and the possibility to limit the concessions to only “sophisticated” investors.

It’s currently unclear whether these measures are included the government’s final amendments.

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Denham Sadler

Denham Sadler is a former editor of StartupSmart. He was previously a journalist at the publication and has worked as a freelancer for the Guardian, the Saturday Paper and the ABC. In his spare time he likes puns and jaffles.

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