The federal government has passed the Treasury Laws Amendment (2017 Measures No.1) Bill 2017, amending tax incentives for startup investors. This has been done to preempt the disadvantage that they could have faced due to a technical glitch while investing through an interposed trust. The amendment also simplifies the exchange of information that takes place between Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC).
Kelly O’Dwyer, the Minister for Revenue and Financial Services, said the Turnbull Government aims to promote innovation and hence facilitate the growth of the economy.
The concept of startup tax incentives came into force in July 2016 as the part of government’s innovation agenda. It enables early stage investors and those investing via Early Stage Venture Capital Limited Partnerships an access to capital gain concessions. The government has amended the law to ensure capital certainty for the investors who seek to invest in startups and certain venture capital arrangements through an interposed trust. Minister O’Dwyer reiterates this point by stating,
We have amended the income tax law to ensure that two National Innovation and Science Agenda (NISA) measures now deliver more support to innovative Australian companies and more certainty for their investors.
Therefore, the law ensures that investors are able to access the capital gain concessions provided by the Tax Incentives for Early-Stage Investors and the New Arrangements for Venture Capital Limited Partnerships measures.
The bill has also streamlined the process by which ASIC shares confidential information with the ATO. The process mirrors the existing information sharing arrangements ASIC has with the Reserve Bank of Australia and the Australian Prudential Regulation Authority. Minister O’Dwyer states,
Simpler and more efficient information sharing arrangements will benefit Australian taxpayers by enabling better monitoring by ASIC and the ATO of illegal activities and strengthening tax compliance by companies and individuals.