However, if you invest more than $50,000 in ESICs over the financial year, you need to meet the 'sophisticated investor' test under the Corporations Act 2001 to claim any of the incentives.1
There are other rules such as maximum shareholding (30%), affiliated companies and employee share schemes that can also make investments ineligible, and these are outlined on the ATO’s website.
To be considered a sophisticated investor you need to be certified by a qualified accountant as having:
You can manage this certification process online using Cygura.
Cygura enables you to be certified by your accountant in minutes, and provides an online portal where you can share and manage your certificate in real time. Importantly, there’s no charge to create, store or share your certificate.
Startups are often higher risk investments so it’s important to make sure you’re eligible for any incentives that are available to you.
Before you invest, arrange to be certified by your accountant. That way, if you choose to invest $50,000 or more in eligible ESICs over the financial year, you’ll still be able to claim the tax offset and GST exemption, which helps to maximise your investment return.
Remember you may need to hold onto your certificate for up to 15 years to claim the CGT exemption.
You can find out more about investing in innovation at the Australian Government’s National Innovation and Science Agenda website or the Australian Tax Office, Tax incentives for early stage investors.