As part of the ‘ideas boom’ movement, the government has cast a spotlight for savvy investors onto the burgeoning startup scene through the Early Stage Innovation Company (ESIC) tax incentive scheme. The main drawcard for investors involves a ‘tax break’ of 20% equal to the investment made towards a qualifying ESIC share in a startup. This generous concession assists the investor and affiliates to invest up to $1 million whilst making full use of the incentive.
The benefits don’t stop there – startups with ESIC status are also privy to relaxed CGT rules. Investors holding the shares between 12 months and 10 years don’t incur capital gains (or losses) during this time.
Startups wanting to obtain the popular ESIC investment status will find that the criteria is largely based on a rather significant but slightly versatile 100 points check. Highly favoured criteria includes the eligible expenditure the R&D Tax Incentive, obtaining the Accelerating Commercialisation grant, the receipt of 3rd party investments or participating in an accelerator program. There is also a ‘principles’ based test which may apply.
Obtaining ESIC status no doubt puts your venture on a firm advantage to other competing opportunities for investment. It is important to note that are a whole suite of disqualifying factors however and ideally the determination made should take into account all the current tax cases to date.
Fullstack helps startups make a confident determination on their eligibility for the ESIC status and incorporates the tax break for investors in their tax situation. For a complimentary discussion about the ESIC tax concessions and how they could apply to you contact the Fullstack Advisory team on 1300 887 627 or via email email@example.com.