From little things, big things grow
It’s a fact of life that venturing into the development of new and more efficient solutions can be a risky and difficult process, often asking for hefty seed funding to cover large amounts of research and development expenditure with no guarantee of commercial success.
Fortunately for both innovators and investors, the early-stage innovation company (ESIC) tax offset is a mechanism that provides a significant tax incentive for investors in eligible companies, reducing financial risk and encouraging investment that allows bold thinkers to bring their ideas to fruition.
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If a company passes the tests to be classified as an ESIC, its shareholders may be able to access the following benefits:
Carry-Forward Tax Offset
A non-refundable carry-forward tax offset equal to 20% of the amount paid for their eligible investments (up to a maximum investment of $1,000,000, with the offset capped at $200,000)
Disregarding of Capital Gains
Disregarding of capital gains on the disposal of ESIC shares held for between one and ten years.
WE'RE HERE TO HELP
The key to ensuring a company’s ESIC eligibility and by extension protecting your investor’s incentives is documentation. Between tracking research & development expenditure, documenting the company’s capitalisation pathway and proving up the commercial applications of the innovation in question, there can be a significant administrative burden involved in maintaining the records necessary to retain a company’s ESIC status,
If you are interested in how your company can benefit from ESIC eligibility, please don’t hesitate to contact your Hall Chadwick advisor, who can put you in touch with our resident ESIC experts.
GET IN TOUCHMeet our Experts
Rick Hopkins
Director - Taxation
Edward Allen
R & D Consultant