November 8, 2016

Early stage investor tax incentives

Early Implementation
Description of the core change(s) brought by this policy instrument

Provides a tax incentive (income tax reduction and capital gains tax exemption) for early stage investors in startups.

Please list the implementing agencies

Australian Taxation Office

Please name the policy advisor(s) or leader(s) who have been key in introducing and/or designing this policy instrument

Wyatt Roy MP, StartupAUS

Lifecycle of target firms for this policy instrument
Start-up firms
If you marked "start-up" and/or "scale-up" firms, please provide the specific definitions used

Defined as firms less than 3 years old, with limited net revenue (less than AUD 300,000 in the previous 12 months) and limited expenditure (less than AUD 1,000,000 in the previous 12 months). Must be an ‘innovation company’ under the Act.

Support offered
Indirect Financial Support
Level of intervention
Barrier(s) addressed with this policy tool
Access to capital: early-stage investment
Regulatory/policy: other
Policy timeline

Announced in December 2015, took effect on 1 July 2016.

Stated goal/metrics of the policy instrument

Increase the availability of angel investment capital to startups.

Evidence of results

Strong anecdotal support, but too early to say.

Challenges, criticisms and lessons

Restrictive definition of startup. Difficult period between announcement and measures taking effect: created a funding gap while investors held off until tax incentives kicked in.

Notes and additional context

Policy initially modelled on UK’s SEIS. Altered substantially for Australian context - particularly by restricting eligible companies to high-growth startups.

Geographic scope