The Significant Investor Visa program
The Australian Government’s Significant Investor Visa (‘SIV’) program offers an exciting concessional opportunity for high net worth (HNW) investors looking to migrate to Australia.
What are complying investments for the SIV?
From 1 July 2015, complying investments for applicants for a Significant Investor visa includes:
- At least A$500,000 in eligible Australian venture capital or growth private equity fund(s) investing in start-up and small private companies. Note the Government expects to increase this to $1million for new applications within two years as the market responds;
- At least A$1.5 million in an eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the Australian Securities Exchange (ASX); and
- A ‘balancing investment’ of up to A$3 million in fund(s) or LICs that invest in a combination of eligible assets that include other ASX listed companies, eligible Australian corporate bonds or notes, annuities and real property in Australia (subject to the 10% limit on residential real estate).
EARLY STAGE VENTURE CAPITAL LIMITED PARTNERSHIPS (ESVCLP)
The programme is aimed at stimulating Australia's venture capital sector by helping fund managers attract capital. Fund managers planning to raise an early stage venture capital fund of between $10 million and $100 million that pools investors’ capital can apply to Innovation Australia to register the fund as an ESVCLP.
An ESVCLP is entitled to flow-through tax treatment (it is not a taxing point) and its investors pay no tax on their share of returns (capital or income) when an ESVCLP disposes of an eligible investment. However, an investor's share of a loss arising from the disposal of an eligible investment is not deductible.
Broadly an eligible investment is the acquisition of new shares or units in an eligible Australian business (property development and finance are excluded) with total assets of not more than $50 million. An ESVCLP must dispose of an investment if the investee grows to have more than $250 million in total assets.
The programme is enabled by the:
Venture Capital Act 2002 (VCA); and
Income Tax Assessment Act 1936 and 1997 (ITAA36 or ITAA97).
The programme commenced on 21 June 2007 when the Tax Laws Amendment (2007 Measures No.2) Bill 2007, which amended the VCA and both the ITAA36 and the ITAA97, received Royal Assent.
The programme is jointly administered by the Board with the support of AusIndustry, and the Australian Taxation Office (ATO).
VENTURE CAPITAL LIMITED PARTNERSHIPS (VCLP)
The programme is aimed at stimulating Australia's venture capital sector by attracting foreign investors but is also open to domestic investors. Fund managers planning to raise a venture capital fund of at least $10 million (there is no upper limit) can apply to the Board to register the fund as a VCLP.
A VCLP is entitled to flow-through tax treatment (it is not a taxing point) and its eligible foreign investors do not pay capital gains tax on their share of returns the VCLP makes from eligible venture capital investments. Returns to domestic investors are taxed in their hands and a deduction for any losses may be allowable.
The programme is enabled by the:
Venture Capital Act 2002 (VCA); and
Income Tax Assessment Act 1936 and 1997 (ITAA36 or ITAA97).
The programme commenced in December 2002 with passing of the VCA and amendments to the ITAA36 and ITAA97.
The programme is jointly administered by the Board with the support of AusIndustry, and the Australian Taxation Office (ATO).
Difference between ESVCLP and VCLP
Both have to be a minimum of $10M with the ESVCLP having a maximum of $100M. The main difference between the two are: the ESVCLP cannot be invested in any startups with more than $50M of assets and has to be divested when assets reach $250M. In return the ESVCLP receives better tax treatments by both domestic and international partners not being taxed on any profits made. Whereas, with the VCLP, only international LPs are not taxed on profits made.
