Australian government unveils incentives for start-ups

The initiative, known as the National Innovation and Science Agenda, includes 24 policies costing A$1.1 billion ($795 million) over four years. These include tax breaks for early-stage investors, changes to insolvency laws, the creation of co-investment funds, and additional support for incubators and accelerators.

The Australian Private Equity & Venture Capital Association (AVCAL) welcomed the move, in particular changes to the taxation system that encourage investment in early-stage, high-growth start-ups.

Under the new policy, investors that have backed a start-up for more than three years will be exempt from the capital gains tax on that investment for 10 years. They will also receive a a 20% non-refundable tax offset based on capital invested in start-ups or through funds. The offset is capped at A$200,000 per investor per year.

The government has also introduced a 10% tax offset for capital invested through Early Stage Venture Capital Limited Partnership (ESVCLP) structures. In addition, the maximum permitted fund size for these structures has been increased from A$100 million to $200 million.

Details were provided on two sizable co-investment funds. The A$200 million CSIRO Innovation Fund will co-invest in new spin-off and start-ups, products and services created by Australian research institutions, while the A$250 million Biomedical Translation Fund will invest alongside biomedical-focused GPs in certain deals.

The innovation statement aims to address two failures among Australian start-ups: collaboration and commercialization. A key objective of the new policies is ensuring greater alignment between public sector research and the private sector. With this in mind, steps will be taken to promote global strategies in science and innovation, and changes will be made to the criteria for research grants.

There are also plans to reform the employee share scheme and introduce a new entrepreneur visa program.

Two weeks ago, Bill Ferris, co-chairman and co-founding partner of CHAMP Private Equity, was appointed chairman of Innovation Australia, an independent, government-established body with a mandate that includes supporting start-ups and venture capital.

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• Topics
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