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Australia To Extend Venture Capital Tax Breaks To FinTech

by Mary Swire, Tax-News.com, Hong Kong

31 October 2017


The Australian Government is consulting on draft legislation to enhance tax breaks for angel and venture capital investors.

Under the current venture capital limited partnership (VCLP) regime, a VCLP is taxed on a "flow-through" basis, rather than being treated as a company for tax purposes. This means that the partners, rather than the "partnership" are taxed, under the personal income tax regime.

Early-stage venture capital limited partnerships (ESVCLPs) are also taxed on a "flow-through" basis, but the tax concessions available for these are more generous, given the higher degree of risk involved. A separate incentive also exists for early-stage investors outside the venture capital framework.

The Government intends to reform the rules to ensure that start-up Financial Technology (FinTech) businesses can access the venture capital investment tax concessions.

The Government will enable ESVCLPs and VCLPs to invest in companies that have finance or insurance activities as their predominant activities, provided that they are early-stage companies. Under the present rules, both finance and insurance are ineligible activities for the purposes of the venture capital tax concessions.

The consultation will close on November 10.

TAGS: tax | investment | small business | business | tax incentives | insurance | Australia | legislation | venture capital | tax breaks | micro business | tax reform

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