April 6, 2016 taxitime

New incentives for research & development innovators

Many years ago we had a young client that bought into a physio practice and he has developed an amazing career! His career has taken him off the tools (people), saved his hands and allowed him to follow his dream of creating a life changing product in the medical space.

That client is still with our firm and he now runs a public company! Over a 12 year period he developed his idea to the point of it becoming a Public Company. A fantastic storey, but he is not the only client of ours that is treading this path.

There is one thing these clients have in common and that is at their start-up receiving a research & development tax break or grant and the government is proposing new incentives from the 1st of July 2016. The incentive is coming in the form of a tax concession.

Eligible clients will receive a tax offset of 20% of their investment, up to a maximum offset of $200,000 per income year. The offset may be carried forward to a later year but will count towards that year’s cap.

The investment will also be exempt from capital gains tax (CGT) if the investor sells their shares (or some other CGT event occurs) at least one year but less than 10 years after the initial investment. If the investor still holds the shares after 10 years, the shares’ cost base will be refreshed to their market value at that time.

Exciting stuff if you are eligible, so talk to me if you think this maybe useful for you.

Pat Mannix, Partner, Paris Financial

Follow me on Twitter @mannix_pat

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