Investors Can Now Receive 20% Tax Offset on Their Investments

The upcoming ESIC Tax Offset deadlines, as recent media indicates that more attention is needed on this new incentive. As you probably know, if you qualify, you can use this ESIC Tax Offset to your advantage when raising capital.

If you are an Early Stage Innovation Company (ESIC) then the 30th June and 31st July are key dates.

Make sure you check your ESIC eligibility, first of all. You can check out the ATO website, or talk to a consultant to find out (details below).

Getting funds invested and shares issued before June 30 may have a big impact on your investors ability to claim the ESIC benefits.

Then the company must lodge with the ATO by the 31st July.

ESIC Tax Offset Overview

Just over a year ago the government introduced tax incentives for early stage investors whereby from July 1, 2016, if they invest in a qualifying early stage innovation company (ESIC), they may be eligible for tax incentives.

To qualify for the tax incentives, investors must have purchased new shares in a company that meets the requirements of an ESIC immediately after the shares are issued. The shares must have been issued on or after July 1, 2016.

A company will qualify as an ESIC if it meets both:
1) the early stage test; and
2) either the 100-point innovation test or principles-based innovation test.

Review your eligibility and provide investors with a position statement.

By being registered with ESIC your investors get a 20% tax offset of up to $200,000, plus altered CGT status which can reduces CGT to 0%. Sophisticated and professional investors can invest up to $1,000,000, and other investors can invest up to $50,000. There are exclusions to check on for affiliate investors, and investors with over 30% shareholdings.

Support Services

ATO Website:

https://www.ato.gov.au/Business/Tax-incentives-for-innovation/In-detail/Tax-incentives-for-early-stage-investors/

BIIG Trend is a specialist financial firm, focused on innovation. Biig Trend are assisting with several Wholesale Investor clients with ESIC eligibility assessments, position statements, investor communications, and upcoming lodgements.

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