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Tax Changes Aim To Make Australia World Player In Venture Capital

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

11 December 2003


Thanks to recent tax and legal changes, many large international investments funds are now taking Australia more seriously as a place to do business, according to the Australian Venture Capital Association Limited.

AVCAL has suggested that investment firms such as large US and European-based pension funds could pump up to $1 billion per year into the Australian venture capital sector over the next five years as a result of the new changes.

"For the first time Australia is emerging on the international venture capital scene," explained AVCA project manager Jake Burgess, according to The Age. He added that: "This is massively important for the venture capital industry and for early-stage enterprises and corporate rejuvenation."

However, although the government’s move last year to cut capital gains tax for foreign investors through venture capital limited partnerships has made the country a much more attractive option for overseas investment, venture capitalists warn that the changes need “massive marketing” to ensure the country remains on the international investment map.

"It brings venture capital in Australia in line with overseas," Malcolm Thornton, investment director for Starfish Ventures, told The Age. "But a huge marketing effort is still needed to put it on the radar for overseas investors."

Currently foreign capital provides around $100 million per year for the Australian venture capital market, whilst superannuation funds constitute about one-third of the market. The rest comes from banks, corporations and other sources.


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