Government introduces significant tax changes in innovation statement

Significant tax breaks and incentives for Australian investors were unveiled on Monday when the Turnbull government released their National Innovation and Science Agenda.

The tax changes are designed to help support start-ups to develop their ideas in Australia.

Investors will now be able to access a 20 per cent tax offset instead of deductions or a (CGT) exemption in start-up companies that are less than three years old, are unlisted, and received less than $20,000 in income in the previous year.

The reason for changing to the offset model over a deduction is because it will benefit people more evenly across the differing income groups. The cost of the offset is estimated to be $106 million over four years, with most funding beginning after 2017.

This means that if someone was to invest $20,000 and claim the offset, they would be able to reduce their income tax by $4,000. If the investor then sold their shares three years later, their initial $20,000 will also be exempt from CGT. For start-ups, this will bring forward the point at which they can receive a tax break.