To ensure current venture capital tax concessions support genuine early stage Australian start-ups, the Government announced a review into the tax treatment of venture capital, with the Terms of Reference for the review released on 7 July 2021.
Recent trends demonstrate a vibrant Australian venture capital industry with a record $1.3 billion raised in 2020, compared to $200 million in 2013, according to the Australian Investment Council. This capital provides start-ups and small innovative businesses with funds for projects that can lead to technology improvements and boost productivity growth.
As part of the 2016 National Innovation and Science Agenda, the Government implemented reforms to enhance the concessional treatment of the Early Stage Venture Capital Limited Partnership (ESVCLP) program to target this concession towards ventures at the very early stages of the lifecycle of a developing start-up. Five years on, now is the appropriate time to evaluate the impact of these tax concessions.
The review will be undertaken by Treasury and Industry Innovation and Science Australia (IISA) and will cover the ESVCLP, the Venture Capital Limited Partnership (VCLP), and the Australian Fund of Funds (AFOFs) programs.
Treasury and IISA will undertake stakeholder consultation over the coming months. Information on this process, including how to make a submission, can be found on the Industry Innovation and Science Australia consultation website. It is expected that the final report will be delivered to the Treasurer towards the end of 2021.
Terms of reference - 124KB
Consultation paper - 743KB