The National Innovation and Science Agenda (NISA) was launched by the Federal Government over 2 years ago on December 7, 2015 with over 30 separate initiatives to foster innovation driven economic development in Australia.
Despite the promising nature of the intiative, the NISA has failed to capture sufficient interest and imagination of the public. Despite this, there are several very worthy and useful programs within NISA that early stage companies should be aware of and take advantage of where appropriate.
Some of the programs in the NISA include:
Tax Incentive for Early Stage Investors: The objective of this program is to provide an incentive for investors to invest in risky early stage ventures that are often starved of capital. There are a series of criteria that a company must meet for an investor to be able to benefit from this program.
- A 20 per cent non-refundable carry-forward tax offset on investment, capped at $200,000 per investor, per year.
- A 10 year capital gains tax exemption for qualifying investments held for at least twelve months.
New arrangements for Venture Capital Limited Partnerships
- A new 10 per cent non-refundable carry-forward tax offset is available to partners in new Early Stage Venture Capital Limited Partnerships (ESVCLPs) for capital invested during the year.
- The maximum fund size for new and existing ESVCLPs has been increased from $100 million to $200 million.
- ESVCLPs are no longer needed to divest a company when its value exceeds $250 million.
Increasing access to company losses: This program could be a useful iniative for earlty stage companies that need to pivot.
Some of the rules around company losses have been relaxed giving businesses more flexibility.
Intangible asset depreciation
Changing the tax treatment for acquired intangible assets will make startups' intellectual property and other intangible assets, a more attractive investment option.
This may take away some of the onerous aspects of pivoting and restricting companies
Reforms to employee share schemes
There have been some useful reforms of late to employee option and share schemes that now make them attractive again: