In an attempt to promote innovation in the Australian economy, the government has introduced several new measures including a revamped Significant Investor Visa, tax incentives for startup investors, and a new Business Visa stream designed to facilitate permanent residence for entrepreneurs in the country. These measures are aimed at attracting foreign investment into the Australian technology sector and to bring in skilled and business migrants into emerging sectors of the economy.
The revamped SIV, introduced in July 2015, requires investors to allocate funds to emerging businesses and in venture capital and private equity funds that invest money in small cap and startup companies.
The SIV is Australia’s investment immigration visa that entitles the holder to fast-track permanent residence in the country provided the investor complies with investment, residence, and employment-related norms.
To qualify for the SIV, the applicant must invest at least $5 million in eligible assets for a period of at least four years. The revamp introduced minimum investment norms for specific asset classes as well.
At least 10%, or $500,000, must be invested in startups and small cap companies through venture capital and growth PE funds specializing in investments in such enterprises.
At least 30%, or $1.5 million, must be invested in listed emerging companies through managed funds or Listed Investment Companies specializing in investments in such enterprises.
The balance of up to $3 million can be invested in funds in Listed Investment Companies that invest in one or multiple permitted asset classes that include
- Listed Australian companies,
- Infrastructure Trusts,
- Preferred Equity of Australian companies,
- Bonds or notes issued by Australian corporations,
- Deferred Annuities, and
- Real estate provided investment in residential real estate does not exceed 10% of the balance investment amount.
Further, the government has announced attractive tax incentives for those investing in startups in Australia. The proposed incentives include:
- Non-refundable tax offset of 20% subject to an annual cap of $200,000 on investments made in new issues of shares of qualifying Australian companies.
- No tax on capital gains earned on shares issued by qualifying startups provided the same have been held for 1-10 years. In such cases, capital losses on shares of startups held of less than ten years will have to be disregarded by the investor.
These incentives are expected to come into force from 1st July, 2016.
Finally, the government is planning to introduce a new Entrepreneur Visa with effect from November 2016. This visa will be established as a new stream of the existing Business Innovation and Investment Visa, which also includes the Significant Investor Visa.
Entrepreneurs with a start up idea with high potential of growth having capital support and financial backing from a third party may be offered permanent residence in Australia as an incentive to setup the startup in the country.
This new visa is expected to promote job creation in the Information and Communications Technology sector as well as the Science, Technology, Engineering and Mathematics sector. The authorities are looking beyond wealthy investment immigrants and intend on the three measures to attract skilled individuals with entrepreneurial and business acumen into the country.
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