Fund managers seeking to raise a new venture capital fund of at least $10 million for investing in Australian businesses with assets of up to $250 million may be eligible for VCLP registration.
The aim of the Venture Capital Limited Partnership program is to increase foreign investment in Australian venture capital sector. 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.
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
More Venture Capital Limited Partnerships Program (VCLP) Grants
- Advanced Development and Marketing Fund
- Australian Small Scale Offerings Board (ASSOB)
- Duty Drawback Scheme
- Entrepreneurs’ Infrastructure Programme
- Export Finance Insurance Corporation (EFIC)
- Export Market Development Grants (EMDG)