TAX ALERT - MARCH 2016

Tax Incentives for Investment In Start-ups

- The government introduced the Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 into Parliament, providing a new regime of tax incentive for early stage investors. (If enacted, measures would apply from 1/7/2016).

- Where the conditions are met, an investor will qualify for the following tax relief:

i) 20% non-refundable carry forward tax offset capped at $200,000 per investor per year (ie. Maximum investment of up to $1,000,000.)

ii) A 10 year exemption on Capital Gains Tax where the investment is held longer than 12 months but less than 10 years.

- The investment must be in an early stage investment company. This is an Australian incorporated company at an early stage of its development and it is developing new or significantly improved innovations with the purpose of commercialization to generate an economic return.

- The benefits will be available to all investors, and investors may choose to invest directly or via a trust or partnership structure.

- In addition to the above, the Bill also delivers changes to the tax treatment of early stage venture capital limited partnerships. Investors will receive a 10% non-refundable carry forward tax offset on capital invested during the year.

Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.