Early Stage Venture Capital Limited Partnership (ESVCLP)Overview
This programme aims to stimulate Australia's venture capital sector by helping fund managers attract pooled capital.
The programme operate by:
- Treating ESVCLPs as ordinary partnerships, or ‘flow-through’ vehicles, for tax purposes.
- Exempting all partners of an ESVCLP from tax on their share of the income and gains derived from, or from disposal of, eligible early stage venture capital investments.
- Giving limited partners a non-refundable carry forward tax offset of up to 10% of their eligible contributions.
- Taking general partners’ interests to be held on capital account rather than on revenue account.
ESVCLPs are no longer required to divest an eligible venture capital investment when it exceeds $250 million, but capital gains tax will apply to gains made after an investee company exceeds $250 million in assets.
Fund managers who plan to raise an 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.
Eligible applicants must:
- Be a limited partnership.
- Be established in Australia or a country with which Australia has a double tax agreement.
- Have a partnership agreement that:
a) Remains in existence for not less than five years and not more than 15 years.
b) Requires partners to contribute capital when required.
c) Prohibits the addition of new partners except as provided for in the agreement.
d) Prohibits increases in committed capital except as provided for in the agreement.
e) Confers on a general partner the right to require partners to contribute their committed capital to the partnership.
f) Includes a plan which outlines its intended investment activities.
- Have a general partner(s) that:
a) Is a resident of either Australia or a country which Australia has a double tax agreement.
b) Has access to appropriate venture capital management expertise.
- Have a plan to make early stage venture capital investments.
- Have at least $10 million and not more than $200 million committed capital.
- Ensure no partner (investor) contributes more than 30% of the partnership’s committed capital unless approved by the Committee.
- Not hold any investments that are not allowed by the VCA or are not in accordance with the partnership’s approved investment plan.
- Only carry on activities related to making investments allowed by the VCA.
Please refer to the Customer Information Guide for the complete eligibility requirements.
Eligible investments in a business include those that:
- Are located in Australia, including:
a) 50% of its assets
b) 50% of its staff
- Are either a company or a unit trust.
- Have total assets of not more than $50 million.
- Has a registered auditor.
- Has a predominant activity that is not:
a) Property development or land ownership
e) Making investments directed at deriving passive income
- Do not invest the ESVCLP’s investment in another entity (there are exceptions).
- Are not listed. There are exceptions in cases where an ESVCLP invested before listing.
Please refer to the Customer Information Guide for the complete list of eligibility investments.
The main assessment criteria include:
- Stages of development.
- Cash flow levels.
- Levels of technology.
- Proportion of intellectual property to total assets.
- Levels of risk and return.
- Amount of tangible assets and collateral against which borrowings may be secured.
Please refer to the Guidelines for the complete list of the assessment criteria.
- Research & Development
- Business Support
|Information Paper No.1 - Interpretation of ''Associate''||2017-12-08||Download|
|Expectation and Compliance Statement||2017-12-08||Download|
|Information Paper No. 2 - Exercise of discretion under section 9-4 (1) of the Venture Capital Act 2002||2018-06-12||Download|
|ISA Information Paper - Extension of Application Timeframe||2018-09-12||Download|
|Customer Information Guide||2019-03-12||Download|
|Information Paper - Forms approved by Innovation and Science Australia||2019-03-12||Download|
Use these documents as a guide only - always get the latest direct from the Administrator