The programme aims to stimulate Australia's venture capital sector by helping fund managers attract pooled capital. Fund managers who plan to raise an Early Stage Venture Capital Limited Partnership (ESVCLP) of between $10 million and $200 million can apply to Innovation Australia’s Innovation Investment Committee (the Committee) to register the partnership as an ESVCLP.
An ESVCLP is a flow-through entity (it is not a taxing point). Its investors pay no tax on their share of returns (capital or income) when an ESVCLP disposes of an eligible investment. However, an investor's share of a loss arising from the disposal of an eligible investment is not deductible.
Broadly an eligible investment is the acquisition of new shares or units in an eligible Australian business with total assets of not more than $50 million. An ESVCLP is no longer required to divest an eligible venture capital investment when it exceeds $250 million (although tax concessions are restricted from this threshold).
The programme is enabled by the:
• Venture Capital Act 2002 (VCA); and
• Income Tax Assessment Act 1936 and 1997 (ITAA36 or ITAA97).
This paper gives an overview of Early Stage Venture Capital Limited Partnerships and has been written under the following headings: