Contact: Rick Taylor
Deloitte
Partner
+61 (0) 2 9322 7620

Contact: Vessa Playfair
Deloitte
Director of Communications
+61 (0) 419 267 676

The Government’s announcement of a tax exemption for gains flowing through Early Stage Venture Capital Limited Partnerships (ESVCLP) will attract greater investment, according to Rick Taylor, a private equity partner at Deloitte.

“I would predict that the majority of funds will come from retail and offshore investors for start-up and growth companies seeking to commercialise good Australian ideas,” said Mr Taylor.

“Details of the rules applying to ESVCLPs are scant. At first blush the announcement reveals these rules are complicated and restrictive and may lead to a low level of excitement by Australian venture capital and private equity fund managers.”

“For instance, why would a fund manager set up a new ESVCLP that is limited to $100 million when Australian institutions are scrabbling to invest in management buy out funds which typically have more than $250 million of committed capital?”

“The fact that exemption from tax will apply to revenue and capital gains flowing through to both local and foreign partners is certainly attractive.”

“Let’s hope the tax exemption is attractive enough to offset the complications that will be imposed on ESVCLPs.”

“I suspect that superannuation funds will not be excited by the tax incentive, but retail investors may be encouraged by the tax exemption to have a bet,” said Mr Taylor.