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Early stage innovation companies – A deeper dive

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Published on 01 Mar 17 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

As part of the National Innovation and Science Agenda, the government has been working to encourage innovation by ensuring that tax incentives are available for early stage investors in qualifying “early stage innovation companies” (ESICs) — typically, start-up companies with high growth potential. In May 2016, the Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 was passed to incentivise investors to direct funds towards ESICs through the provision of tax concessions, provided the ESIC satisfies both the “early stage” limb and the “innovation” limb — the latter of which can be satisfied by passing the “principles-based test” or the “100 points test”. This article examines the new legislation and concludes that, despite the ambiguity surrounding the principles-based test and the lack of available guidance regarding the incentives generally, the ESIC tax concessions are a welcome initiative by the government and the uncertainty regarding these provisions can be resolved through further ATO guidance.

Author profiles

Jessica Brass
Jessica is a Assistant Manager – Tax with Grant Thornton. - Current at 14 March 2018
Click here to expand/collapse more articles by Jessica Brass.
Mark Trewhella ATI
Mark is an Associate Director – Tax with Grant Thornton. - Current at 14 March 2018
Click here to expand/collapse more articles by Mark Trewhella.

 

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