Assistant Treasurer Michael Sukkar announced a review of the Early Stage Venture Capital Limited Partnership (ESVCLP) tax breaks that were introduced by the Turnbull government in 2016 as part of its National Innovation and Science Agenda.
The concessions were made to target companies in the very early stages of the lifecycle of a developing start-up and provide tax benefits to Australian and foreign sponsors as well as fund managers.
Mr Sukkar said recent figures from the Australian Investment Council pointed to a strong Australian venture capital industry, with a record $ 1.3 billion raised in 2020, up from just $ 200 million in 2013.
“Five years later, the time has come to assess the impact of these tax breaks,” said Mr. Sukkar.
The terms of the review have now been released, with the Treasury and Industrial Innovation and Science Australia reviewing the ESVCLP, Venture Capital Limited Partnership (VCLP) and Australian Fund of Funds (AFOF) programs.
The review will assess how concessions work in practice and whether they achieve their intended objectives, but policy or reform recommendations will fall outside the scope of the review.
A consultation document will be prepared as part of the process, with stakeholder consultations and the opportunity to make submissions that will take place over the next few months.
The government expects the final report to be delivered “towards the end of 2021”.
Jotham Lian is the Editor-in-Chief of Accountants Daily, the leading source of news, analysis and information for Australian accountants.
Prior to joining the team in 2017, Jotham wrote for a range of national titles including the Sydney Morning Herald and Channel NewsAsia.