She has heard about the 20% tax offset for investors in new start ups and is considering the following investments during the year commencing 1 July, 2016:
Investment one (App. Developer Co):
Acquire shares for $150,000
Eligible Tax Offset being $30,000* ($150K. x 20%)
Investment two (Medi. Tech Co):
Acquire shares for $1,000,000
Eligible Tax Offset being $170,000*# ($1,000,000 x 20%)
# ($200K offset cap less $30K = $170K) tax offset already claimed from investment one
When Melissa lodges her 2017 income tax return she should be entitled to a tax offset of $200,000, which should be refundable against her PAYGW from her salary.
If Meditech co shareholders achieve their exit strategy of listing on the ASX, Melissa should be well on the way to purchasing that dream holiday house in Cambridge.
It is envisaged that App. Developer Co and Medi. Tech Co should have greater opportunity to raise capital and fund growth under these new initiatives, creating jobs and wealth for Australians.
Qualifying starts up are likely to include:
a. unlisted companies formed in last three years
b. have income $200,000 in previous year
c. have expenses $1,000,000 in previous year
When will you have access to this tax benefits?
Royal assent and legislation is anticipated to be in place effective from 1.07.16
* Tax offset: Non-refundable, however if you have paid PAYGI income tax instalments and / or PAYGW withheld, then you can potentially have these refundable to you when you lodge your income tax return.
Part Two…. we shall provide some examples of Melissa’s capital gains tax position.
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