The Minister of Home Affairs, Peter Dutton, has created a new visa aimed at encouraging entrepreneurship and innovation. The new entrepreneurship visa will be trialled in South Australia before being rolled out nationwide in 2019. This article explains the requirements for the current visa and how this will be changed by the new visa.
The Current Visa
There is a current entrepreneur visa under the Business Innovation and Investor Programme (subclass 188 visa in the “entrepreneur stream”). It requires:
- approved entities to endorse the visa applicant’s innovation or entrepreneurial activities; and
- the applicant to obtain funding from an approved entity in the sum of at least $200,000.
Further, the applicant must:
- be below 55 years of age, unless the requirement has been waived by the nominating state or territory;
- receive a nomination from a state or territory where the applicant will live and carry out the entrepreneurial activities;
- provide evidence that the applicant has competent English (IELTS 6.0 across all components or equivalent); and
- ensure their intended entrepreneurial activity is a “complying entrepreneur activity” (explained below).
The current programme has not been successful in attracting sufficient applicants.
Defining a Complying Entrepreneur Activity
A complying entrepreneur activity is an innovative idea that will lead to the commercialisation of a product or service in Australia. Alternatively, it may lead to the development of an enterprise or business in Australia.
However, a complying entrepreneur activity must not relate to:
- residential real estate;
- labour hire; or
- purchase of an existing enterprise or a franchise in Australia.
Additionally, the applicant will need to meet the following requirements:
1. enter into an agreement to receive funding of at least $200,000. from:
- a Commonwealth government agency;
- a state or territory government;
- a publicly funded research organisation;
- investors registered as an Australian Venture Capital Limited Partnership (AVCLP) or Early State Venture Capital Limited Partnership (ESVCLP), managed by the Department of Industry, Innovation and Science; or
- certain higher education providers;
2. at least 10% of the agreed funding must be paid to the entrepreneurial entity within 12 months from the day the entity starts operation;
3. hold at least 30% ownership in the entrepreneurial entity when they enter into the agreement; and
4. provide a detailed business plan for the complying entrepreneur activity.
Transitioning to the 888 Permanent Visa Under the Entrepreneur Stream
In order to meet the eligibility requirements for the new entrepreneurship visa, the applicant must provide evidence of having succeeded in the proposed entrepreneurial activities.
The measure of ‘success’ is a combination of ‘key success factors’ and ‘supporting success factors’.
In addition, the applicant must demonstrate they have completed at least two key success factors or a combination of one key success factor and three supporting success factors.
Key success factors include:
- employing two or more Australians, permanent residents or other eligible persons;
- generating an annual turnover of at least $300,000;
- filing a provisional patent or acquiring a standard or innovation patent;
- receiving ongoing funding or investment in your entrepreneur activity;
- entering into a partnership with a university; or
- selling an entrepreneurial venture for $2 million.
Supporting success factors include:
- diversifying entrepreneurial activities into other business areas;
- receiving a statement of success from a state or territory government nominator;
- receiving sponsorship from the corporate sector;
- starting at least one other business or contributing to at least two other businesses;
- receiving formal awards or recognition; or
- raising or contributing to social capital.
The New Entrepreneurship Visa Removes the Funding Requirement
The new entrepreneur visa removes the requirement for funding. However, the innovative ideas or entrepreneurial activities must be ‘underwritten’ by the relevant state authorities and approved by the federal government. The entities will partner with incubators and accelerators to identify potential applicants for nomination.
The initial visa would be a provisional visa, most likely four years in duration. After successfully obtaining a provisional visa, entrepreneurs should successfully establish their business activities in Australia. After meeting further criteria, they would be eligible to apply for permanent residency.
Those permanent residency criteria are most likely to include turnover and local employment creation, among other requirements.
The new entrepreneur visa will be a great opportunity for entrepreneurs with self-sourced funding, provided their proposed innovative business venture is supported by the state and federal government. The government has identified the benefits of lowering the minimum threshold for the provisional visa and maintain the relative high, but achievable, threshold for the permanent visa assessment.
If you have any questions about starting a business in Australia under the new entrepreneurship visa, get in touch with LegalVision’s immigration lawyers today by calling 1300 544 755 or fill out the form on this page.
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