Techboard is committed to providing investors and companies with useful information about the Innovation Tax Incentive. On this page you will find all blog posts that we have published on the topic. We will continue to bring our registered users and companies more information. To make sure you stay up to date please sign up to Techboard.
Techboard is pleased to announce that on the not so long lead up til the end of another tax year we have partnered with BDO to bring the Techboard audience increased guidance on the application of the Innovation Tax Incentive.
BDO have developed a number of documents to help Australian startups, tech companies and investors to self assess for the Innovation Tax Incentive. For an investor they will assist to determine if an investment they have made or are planning to make will entitle them to tax relief and for a company the forms will help them to judge whether they are eligible as a Early Stage Innovation Company which can arm them for discussions with potential investors.
Our friend Marc Loftus and his team from BDO’s Perth office have been celebrating recently after securing the first ruling from the ATO under the new Innovation Tax Incentive legislation. The ruling was obtained under the principles based test for Epic Delivery who are also listed here on Techboard. This article was first published by BDO.
The world today abounds with rapidly expanding opportunities for innovation, turbo charged by developments in the digital space. Businesses, governments and individuals alike are turning their attention to the significant benefits that technology and innovation are creating.
New markets and products, accompanied by a better understanding of consumers, in addition to the ever increasing number of channels available to connect with end users, makes for exciting times as an innovator or entrepreneur.
BDO is committed to supporting our home grown innovation community and stakeholders by utilising our skills, knowledge and expertise in this sector to assist members of the highly collegiate and motivated start-up scene in WA. Thereby jointly contributing to the bigger picture in raising the profile of Australia on the global stage, as a centre for investment in innovation and technology.
This is the first in a series of pieces on investing in Australian Startups and Technology companies or Early Stage Innovation Companies under the new Innovation Tax Incentive legislation. At Techboard we have been actively exploring how we can support WA companies in raising money and enable investors to discover, research and invest in Australian companies. We thought it might be useful for us to share some of our thoughts and learnings through a number of pieces which might shed some light on what can be a complex area. Consistent with Techboard being a conduit between companies and company watchers we will be looking at the issue from both the perspective of companies seeking investors and prospective investors looking for their next investment.
I was at an Egroup meeting earlier this month and Marc Loftus from BDO was presenting on the new Innovation Tax Incentive. For information on the Innovation Tax Incentive see my earlier post here. A question came from the floor on the subject of what impact the Innovation tax incentive was likely to have on levels of investment. The UK has a similar Innovation tax incentive called the Enterprise Investment Scheme (EIS). The EIS was highly influential on the new Australian Tax Incentive legislation. I was in Scotland from 2006 to 2009 working in the startup and innovation space. I had a fair bit to do with Scottish Angel investors who I knew were using the EIS. I also remembered reading reports on the impact of the EIS on the levels of investment. So I thought I would dig those up and share them.
The UK government introduced EIS in 1992 with the purpose helping types of small higher risk unlisted companies to raise capital. So there is a fair bit of data available to gauge the impact of that scheme.
What do the UK studies reveal?
The earliest report I have found was produced by NESTA in May 2009. That report entitled “Siding with the Angels Business angel investing – promising outcomes and effective strategies” found that:
“Eighty per cent of investors surveyed have made use of the Enterprise Investment Scheme, at least once. And 57 per cent of their investments had made use of the EIS.”
“Investors said that 24 per cent of their investments would not have been made without tax incentives.
In January 2015 the Enterprise Research Centre released a study called “A Nation of Angels: Assessing the impact of angel investing across the UK”. In their report it was stated:
Earlier today the Senate passed the Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016. This Legislation which is expected to be in force on 1 July 2016 provides generous tax incentives for investment in eligible new innovative companies. Techboard Panel of Experts member and BDO partner Marc Loftus has prepared a summary of the bill that can be downloaded below.
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Over the coming weeks Techboard will be bringing you updates about this important legislation and its application for both Companies and Investors and other developments relating to Investing in Australian Startup and Technology Companies. Signup to Techboard to stay informed.
4 May 2016
On 16 March I published a post on the new Innovation Tax Incentives Bill and promised to come back with more analysis. Our friends at BDO have done such an analysis and have concluded that while the legislation provides further incentive for investment in innovative start-ups, some of the eligibility requirements are overly restrictive and time consuming for start-ups to comply with.
Suffice it to say that the Bill is pretty complex, in terms of figuring out if a startup is an eligible company, with a points based formula, the possibility of rulings and with further rules able to be set by regulation. The investor eligibility rules are pretty complicated as well.
What is clear is both retail and sophisticated investors can benefit from the tax breaks on offer… but not equally… and investors investing too close to home (including founders) are not eligible.