More paperwork for those who invested in an Early Stage Innovation Company
With innovation a buzz word in 2017/18 many investors jumped on the bandwagon taking advantage of tax breaks and invested in Early Stage Innovation Companies. For those that did, you may have some additional paperwork that you are required to complete.
Those who invested in an Early Stage Innovation Company (ESIC) either through a Partnership or Trust during the 2018/18 financial year you have a requirement under the tax legislation to nominate a percentage of the offset that each beneficiary/partner is entitled to.
What is an ESIC?
An ESIC is an Early Stage Innovation Company. In order for a company to qualify as an ESIC it must have high growth potential, be able to scale, address a broader than local market, and have competitive advantages.
The government passed legislation that provides tax incentives for investments in ESICs. Investments in ESICs may be eligible for a 20% tax offset, and gains on the sale of an ESIC investment may be CGT free if shares are held for between 1 to 10 years.As a company, ESIC status makes you a more attractive investment and lets investors know you are a promising new company.
More information about ESICs and the related taxation incentives can be found here.
When is the nomination due?
Investors have until 30 September 2018 to provide the nomination to the beneficiaries/partners. Given it is the time of year when trust minutes are being prepared and signed we recommend you consider completing the nomination alongside you trust minutes.
There is no requirement to lodge the nominations with the ATO but they must be prepared, distributed and a copy held on the Trust/Partnerships files.
If you would like any clarification around whether you are entitled to the ESIC offset or for more information on preparing nominations please contact your usual Hanrick Curran advisor or alternatively contact Robert Pitt on 07 3218 3900.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.