Australian tax incentives

ESVCLP

Broadly, investors in an Early Stage Venture Capital Fund Limited Partnership (“ESVCLP”) may be eligible for:

  • an Australian income tax exemption; and
  • an Australian Capital Gains Tax exemption.

However, Jelix does not take into account the specific circumstances of any investor.  Prospective investors should therefore obtain professional tax advice that takes into account their specific circumstances before making the decision to invest.

This summary is necessarily general in nature and is not intended to be either a definitive or an exhaustive statement of the possible tax treatment of investing in companies through the platform. 

Please see the Australian Tax Office website for details of the tax incentives for investors into ESVCLPs.

ESIC

Broadly, investors in ‘early stage innovation companies’ (ESICs) may be eligible for:

  • a 20% tax offset (up to $200k) of the amount invested in respect of Australian tax; and
  • an Australian Capital Gains Tax exemption on shares held for 1 to 10 years.

Many companies that appear on the platform qualify as ESICs. 

Jelix makes every effort to structure our investments to allow qualified investors to take full advantage of ESIC tax breaks where they apply. However, Jelix does not take into account the specific circumstances of any investor.  Prospective investors should therefore obtain professional tax advice that takes into account their specific circumstances before making the decision to invest.

This summary is necessarily general in nature and is not intended to be either a definitive or an exhaustive statement of the possible tax treatment of co-investing in companies with Jelix Ventures. 

Please see the Australian Tax Office website for details of the tax incentives for early stage investors.

Qualifying as an early stage investment company (ESIC)

Jelix requests investee companies to provide sufficient evidence that it qualifies as an ESIC (unless there is an obvious disqualification) to support Jelix investor ESIC tax claims.

Some implications for angel investing in Australia

Shares

ESIC tax incentives are available only if the investment is in newly issued equities.  They are not available for debt instruments such as convertible notes (until they convert to equity) and some redeemable preference shares. Therefore, Jelix usually invests by way of equity in the form of seed preference shares.

Traditionally, angel investors syndicate their Australian investments by way of a unit trust. Current Australian regulations restrict an individual investors benefits from the ESIC tax breaks to a pro rata amount of those of the unit trust. This means that individual investors ESIC tax benefits may be limited when investing by way of a unit trust.

 The Jelix investment structure

On the advice of our lawyers and accountants, we have established a Jelix nominee structure which simply holds investments for our investors allowing them to benefit from the ESIC tax breaks and providing a single entity on the capitalisation table for our portfolio companies. This is important, because too many angel investors early on the capitalisation table, can be an impediment to future fund raising and therefore the performance of our investments.

For more, please see our FAQs page.

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