Survival hints for small business
The Early Stage Innovation Company legislation, which commenced operations from 1 July 2016, has introduced significant taxation benefits for investors.
There is a 20% tax offset based on the amount of the investment and a capital gains tax exemption.
The tax offset maximum amount is $200,000 for sophisticated investors. A sophisticated investor is someone who has net assets of $2.5M and who has earned, at least, $250,000 in each of the last two years and their accountant has signed a statement to that effect.
A retail investor is entitled to a maximum tax offset of $10,000, but the maximum investment that a retail investor can make into an ESIC is $50,000.
The capital gains tax exemption applies if the shares are held for longer than twelve months and less than ten years, then a complete capital gains tax exemption applies on that investment.