Investors who purchase new shares in a startup business may receive a:
- non-refundable carry forward tax offset equal to 20% of the amount paid for their qualifying investments.
- modified capital gains tax (CGT) treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than ten years may be disregarded.
For an investor to be entitled to these tax incentives, the company the investor is looking to invest in must qualify as an early stage innovation company (ESIC) immediately after the new shares are issued to the investor.
A company to qualify must meet the ESIC test: