Assistant Treasurer Michael Sukkar has announced a review of tax concessions of the Early Stage Venture Capital Limited Partnership (ESVCLP) program that were introduced by the Turnbull government in 2016 as part of its National Innovation and Science Agenda.
The concessions were brought in to target ventures at the very early stages of the lifecycle of a developing start-up and offer tax benefits to Australian and foreign limited partners as well as fund managers.
Mr Sukkar said recent figures from the Australian Investment Council point towards a strong Australian venture capital industry, with a record $1.3 billion raised in 2020, compared with just $200 million in 2013.
“Five years on, now is the appropriate time to evaluate the impact of these tax concessions,” said Mr Sukkar.
Terms of the review have now been released, with the Treasury and Industry Innovation and Science Australia to examine the ESVCLP, the Venture Capital Limited Partnership (VCLP), and the Australian Fund of Funds (AFOFs) programs.
The review will assess how the concessions operate in practice and whether they’re achieving their intended objectives, but policy or reform recommendations will fall outside the scope of the review.
A consultation paper will be prepared as part of the process, with stakeholder consultations and the opportunity to make submissions set to take place over the coming months.
The government expects the final report to be delivered “towards the end of 2021”.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.