What is the objective?
Venture Capital Limited Partnerships are venture capital funds structured as limited partnerships that make equity investments in relatively high-risk start-up and expanding Australian companies.
The aim of the Venture Capital Limited Partnership program is to increase foreign investment in Australian venture capital sector.
Venture Capital Limited Partnerships are registered under the Venture Capital Act 2002.
Who is it for?
Fund managers seeking to raise a new venture capital fund to make investments in Australian businesses with total assets of not more than $250m.
A fund registered as Venture Capital Limited Partnership is governed by the Venture Capital Act 2002 and the Income Tax Assessment Act 1997,
What does it offer?
Registration as a Venture Capital Limited Partnership entitles a fund to flow-through taxation treatment. Further, eligible foreign investors in the fund are exempt from capital gains tax on their share of any profits made by the fund. The manager is entitled to claim their carried interest in the fund on capital account rather than revenue.
The extent of the tax benefit depends upon a number of factors. Venture Capital Limited Partnership participants should seek professional tax advice.
How do I apply?
An application form is available from AusIndustry and applications are assessed by Innovation Australia (the Board).
What investments are eligible?
Eligible investments are defined in section 118-425 of the Income Tax Assessment Act 1997. Generally a Venture Capital Limited Partnership can invest in unlisted Australian businesses that are structured as either a company or a unit trust by acquiring shares, options, or companies or unit trusts that will delist within 12 months.
The investment must be held for a minimum of 12 months.
The investment must also be at-risk and the investee business must meet the following requirements:
- the total value of its assets units. They may also invest in are not more than $250 million
- at least 50% of employees and at least 50% of assets are Australia
- its predominant activity is not in property or land development, finance, insurance, construction or infrastructure, or making investments.
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