This chapter is an extract from LegalVision’s 10 Things To Know Before You Bring Your Startup to Australia Guide. Download the full guide here.
The Australian Government is adding fuel to the startup economy, introducing the $1.1 billion National Innovation and Science Agenda in 2015. As part of the Agenda, the Government has introduced a number of tax incentives for early-stage innovation companies (ESIC), early-stage venture capital limited partnerships (ESVCLP) and participants in an employee share scheme.
Australian startups can also access generous Research and Development (R&D) tax incentives for eligible core R&D activities. In the 2016-2017 Financial Year, over 20% of startups benefitted from the refundable tax offset. Government spending on the R&D framework is said to increase over the coming years. In 2017-18, the Australian Government is investing $10.3 billion in R&D.
|Incentive Structure||Benefits for Startups|
Investors that make an eligible investment in an ESIC receive a 20% non-refundable, carry-forward tax offset on their investment and a 10-year capital gains tax exemption for any eligible investment held for at least 12 months.
The investment amount is capped at $200,000 per investor, per year.
Investors that invest in an ESVCLP receive a 10%, non-refundable, carry-forward tax offset that is proportionate to their contribution to the fund.
Startups participating in an employee
If your startup meets the eligibility criteria, you can issue shares or options to purchase shares to an employee who will then only be taxed when they make a nancial gain (i.e. when they sell their shares). Employees won’t be taxed when your startup issues the shares or options, or when they exercise their options.
In addition to favourable tax treatment, the Australian Government has also introduced the Entrepreneurs’ Programme, which provides support to startups through:
- grants for product commercialisation;
- funding support for incubators; and
- connection-building and advice programs for founders.
Finally, if you are looking to bring your FinTech startup to Australia, not only will you be part of Australia’s largest startup industry, but you will also benefit from the Government’s FinTech Program. The Program works to create a favourable regulatory environment that facilitates innovation within the space. Most recently, the Government introduced a regulatory sandbox that enables eligible FinTech businesses to test innovative financial services without the cost of regulatory licensing.
If you have questions about this Manual or about your online business before you start reading, you can contact LegalVision’s startup lawyers by calling 1300 544 755 or filling out the form on this page.
This chapter is an extract from LegalVision’s 10 Things To Know Before You Bring Your Startup to Australia Guide. Download the free 31-page manual which includes information on government incentives, economic trends, geographical considerations, building a team, visas, how to protect your brand and how to set up in Australia.
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