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Start-up Company Investor Tax Breaks

Following increased activity in the Australian start-up ecosystem, the Government has recently introduced attractive tax incentives for investors in eligible start-up companies.

The Federal Government has taken this step to promote investment in the companies that will lead Australia’s technological revolution and long-term economic prosperity as the Australian economy embraces the 21st century.

Qualifying investors subscribing for new shares in eligible “early stage innovation companies” (“ESICs”) can potentially qualify for:

  • a 20% non-refundable carry forward tax offset (capped at $200,000 per investor per annum on the equivalent of a $1m investment per annum); and
  • a capital gains tax (“CGT”) exemption on gains realised on ESIC shares held for between one and ten years, with market value cost base uplift thereafter.

An investor’s ability to access these incentives depends on a detailed set of criteria, in particular, whether a target company qualifies as an ESIC.

Cowell Clarke has significant expertise and experience in advising start-up companies and investors on all aspects of intellectual property, information technology and taxation law. This includes obtaining successful private binding rulings from the Australian Taxation Office to secure access to these incentives for ESIC investors.

If you require any assistance in any of these areas or wish to discuss the incentives further, please contact us.

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