• About
    • About Accru
    • The Accru Advantage
    • Testimonials
    • Our People
    • Our Services
    • International Affiliations
    • Corporate Social Responsibility
    • Join the Accru Network
    • Careers
  • Locations
    • Accru Felsers Sydney
    • Accru Melbourne
    • Accru Rawsons Brisbane
    • Accru Perth
    • Accru Harris Orchard Adelaide
    • Accru Hobart
  • News & Tools
    • News
    • Publications
    • Accru Tax Guide 2017/18 App
    • Fact Sheets
    • Online Portfolio Links
    • Useful Business Websites
  • Careers
    • Working with Accru
    • Culture & Values
    • Accru in the Community
    • Current Vacancies
  • Contact Us
Client Login
Accru Logo Skip to content
  • COVID-19
  • Accounting
    • Cloud Accounting
    • Outsourced Accounting
    • CFO Services
    • Corporate Compliance
    • Find an Expert
    • Testimonials
  • Audit
    • External Audit
    • Internal Audits
    • SMSF Audits
    • Due Diligence
    • Data Analytics
    • Payroll Data Analytics
    • Find an Expert
    • Testimonials
  • Business Advisory
    • Business Management
    • M&A and Business Sales
    • Valuations
    • Restructures
    • Succession Planning
    • Business Turnaround
    • Management Consulting
    • Find an Expert
    • Testimonials
  • Taxation
    • Tax Compliance
    • Tax Advisory
    • FBT & Salary Packaging
    • GST & Indirect Tax
    • International Tax
    • Find an Expert
    • Testimonials
  • Wealth Management
    • Wealth Creation
    • Superannuation & Retirement Planning
    • Self Managed Super Funds
    • Estate Planning
    • Find an Expert
    • Testimonials
  • Finance & Insurance
    • Mortgage Broking
    • Commercial Finance
    • Risk Insurance
    • Find an Expert
    • Testimonials
  • International Business
    • Services for German-speaking companies
    • Services for Chinese-speaking companies
    • Starting a business in Australia
    • Expanding overseas
    • Transfer Pricing Australia
    • International Tax
    • Find an Expert
  • Industries
    • Pharmacies
    • Medical Practitioners
    • Not-for-Profit
    • Education
    • Property & Construction
    • Professional Services
    • Manufacturing & Distribution
    • Finance & Investment
    • Retail
    • Digital, Media, Emerging Technologies
Client Login
  • Accru Acccountants | Audit | Tax | Business Advisory
  • Services
  • About
    • About Accru
    • The Accru advantage: quality, innovation and value
    • Testimonials
    • Our People
    • International Affiliations
    • Corporate Social Responsibility
    • Join the Accru Network
    • Careers
  • Locations
    • All Locations
    • Accru Felsers Sydney
    • Accru Melbourne
    • Accru Rawsons Brisbane
    • Accru Perth
    • Accru Harris Orchard Adelaide
    • Accru Hobart
  • News & Tools
    • News
    • Publications
    • Accru Tax Guide 2017/18 App
    • Fact Sheets
    • Online Portfolio Links
    • Useful Business Websites
  • Careers
    • Careers
    • Working with Accru
    • Culture & Values
    • Accru in the Community
    • Current Vacancies
  • Contact Us
Facebook LinkedIn Twitter Youtube
Accru logo

Tax incentive for early stage investors (TIESI)

By Glenda Nixon / October 7, 2017

The Tax Incentive for Early Stage Investors (TIESI), was enacted in December 2015 as part of the Government’s National Innovation and Science Agenda (NISA). What are the benefits and who is eligible?

It has been nearly a year since the Government released NISA, a package of measures designed to develop a culture of entrepreneurship and innovation. One of these measures, TIESI, has been gaining traction.

TIESI tax benefits

The TIESI measure provides tax incentives for investors in early stage innovation companies. Investors who qualify:

  • Receive an attractive ‘non-refundable’ carry-forward tax deduction of 20% of the cost of new shares up to a maximum cap of $200,000.
  • May disregard capital gains realised on shares in early stage innovation companies up to ten years. But on the downside, investors lose the ability to claim capital losses on these shares if held for less than ten years.

What does ‘non-refundable’ mean?

Simply put, investees need to have tax liabilities against which to apply the 20% offset. If an investee doesn’t have any other tax liability, there isn’t an immediate tax benefit in the TIESI. However, as the 20% offset can be carried forward, the tax benefit is not lost but can be used at some future time when a tax liability arises. Who is an eligible investor? All forms of investors are eligible to claim the incentive other than ‘widely held’ entities – individuals, companies, trusts and partnerships – provided they meet the ‘sophisticated Investor’ test under the Corporations Act 2001.

A ‘sophisticated investor’ is a type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. They are required to meet an asset and taxable income threshold that enables them to be approached without having to receive an official prospectus on a potential investment. This type of investor can claim the TIESI up to $200,000 – in other words, for investments up to $1,000,000. Retail investors can still also participate but their cap is only $50,000 rather than $200,000.

Qualifying as an investee company

To access the TIESI tax benefit, the investor has to invest in shares issued in a qualifying Early Stage Innovation Company (ESIC). To be an ESIC, there are two ‘limbs’ that must be satisfied:

  • The company must be Australian incorporated and be at an early stage of development (the early stage limb) and
  • Developing new or significantly improved innovations with the purpose of commercialisation to generate economic returns (the innovation limb).

There are specific objective tests for each limb:

  • For the early stage limb, the company must be newly incorporated, have incurred less than $1,000,000 total expenses in the prior year, earned less than $200,000 assessable income in the prior year, and not listed on the ASX.
  • For the innovation limb, there is a principles-based test which means the company is developing a new or significantly improved innovations such as a product, process or service and the company needs to substantiate that position.

To provide certainty, there is also an objective ‘100 points’ test. Once the company has at least 100 points for meeting certain objective criteria, it can consider itself an ESIC. Finally, a company can get absolute certainty by applying for a tax ruling.

Both investors and ESICs may require professional advice to determine whether they satisfy the criteria. Accru can help investee companies at every stage – from the assessment process, to applying for a ruling and the company’s reporting requirements. Please contact your local advisor if you would like to know more.

About the Author

Glenda Nixon, Accru Felsers Sydney

Glenda's focus is on tax minimisation strategies, international tax and transfer pricing. She assists overseas companies in Australia to structure themselves correctly and advises many clients from Germany and Austria. Glenda is a regular speaker at international conferences and occasional university guest lecturer. She has long standing relationships with Accru’s international associates. Read more.

Leave a Reply

Your email address will not be published

Cancel

News & Tools

  • All News
  • All
    • Business Growth
    • Digital Business
    • Financial Management
    • International Business
    • Audit Risk & Assurance
    • Tax Essentials
    • Wealth & Superannuation
    • Accru News
  • Publications
  • Accru Tax Guide 2017/18 App
  • Fact Sheets
  • Online Portfolio Links
  • Useful Business Websites

Subscribe to our Newsletter

Subscribe to the Accru Newsletter Subscribe

Latest News

Client Choice Awards 2021
Read article

Accru Top
Services
  • Accounting
  • Audit
  • Business Advisory
  • Taxation
  • Wealth Management
  • Finance & Insurance
  • International Business
  • Industry Sectors
About Us
  • About Accru
  • The Accru advantage: quality, innovation and value
    • Starting a Business
    • Expanding a Business
    • Reaping the Rewards
  • Testimonials
  • Our People
  • Our Services
  • International Affiliations
  • Corporate Social Responsibility
  • Join the Accru Network
  • Careers
Locations
  • Sydney
  • Melbourne
  • Brisbane
  • Perth
  • Adelaide
  • Hobart
News & Tools
  • News
    • Business Growth
    • Finance & Insurance
    • International Business
    • Risk & Assurance
    • Tax & Accounting
    • Wealth & Superannuation
    • Publications
  • Accru Tax Guide 2017/18 App
  • Fact Sheets
  • Online Portfolio Links
  • Useful Business Websites

Follow Accru Australia

Facebook LinkedIn Twitter Youtube
Subscribe to Accru's e-news

Accru's e-news updates are designed to keep you up to-to-date on essential business topics.

Subscribe

© 2021 Accru

Terms of Use | Privacy Policy

Site by Click2It

×