House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Venture capital

Outline of chapter

1.1 Schedule 1 to this bill makes amendments to the venture capital regime to ensure that the regime operates as intended and to extend eligibility for the concession to investments in a holding company that meet the eligibility criteria.

Context of amendments

1.2 The venture capital regime was established to facilitate the development of the Australian venture capital industry by providing incentives for non-resident investment to support equity investment in relatively high risk and expanding businesses. The regime was developed in consultation with the venture capital industry and was enacted by the Taxation Laws Amendment (Venture Capital) Act 2002 and the Venture Capital Act 2002. It came into effect on 1 July 2002.

1.3 Under the regime:

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specified non-resident partners in a venture capital limited partnership or an Australian venture capital fund of funds and eligible non-resident investors are exempt from income tax on the profits or gains on equity investments in Australian companies that are eligible venture capital investments;

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venture capital limited partnerships, Australian venture capital funds of funds and venture capital management partnerships are taxed as if they were ordinary partnerships; and

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after registration, venture capital limited partnerships and Australian venture capital funds of funds are required to provide quarterly and annual returns of their activities to the Pooled Development Funds Registration Board (PDF Board) together with any other information the Board may require.

1.4 These amendments respond to concerns the industry raised and will improve the practical operation of the regime.

Summary of new law

1.5 An investment a venture capital limited partnership, Australian venture capital fund of funds or eligible investor makes in an investee company may be eligible for the tax exemption if the company satisfies a number of requirements. Eligible investments can not be made into a holding company because holding companies cannot satisfy the primary activity test or the restriction on investing in another company unless they are connected with the other company and that other company meets the eligibility requirements.

1.6 The amendments allow an investment in the holding company of a company or group of companies to qualify for the exemption if it satisfies certain requirements. The requirements vary according to whether the investment is being made into a new company or an existing holding company.

1.7 The existing law provides that an eligible venture capital investment can only be made into a company whose total assets, together with those of any connected entities, are valued at not more than $250 million immediately before the investment is made. The effect of this test (the permitted entity value test) is that where a company is being disposed of by a corporate group or institution whose assets are valued at more than $250 million, the investment is not eligible for the exemption. This is the case even if the company will not be connected to the group after the investment has been made and the value of its assets, together with that of entities that will continue to be connected after the investment is made, will not be more than $250 million.

1.8 The amendments will allow an eligible investment to be made into a company if the value of its assets and those of its connected entities, but excluding entities that will not be connected after the investment is made, is not more than $250 million. Integrity rules will ensure that treating each investee company as an independent entity will not allow otherwise ineligible investments in companies that are members of a large corporate group to qualify for the exemption by splitting into smaller entities.

1.9 The following amendments remove minor impediments to ensure that the scheme operates as intended:

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the connected entity rules for related entities will not take into account eligible venture capital investments by the same venture capital limited partnership or Australian venture capital fund of funds;

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the date for applying the eligibility test to an investment in shares acquired on the conversion of convertible notes will be the date on which the convertible notes were last acquired;

•

the place of residence of a venture capital management partnership or a foreign venture capital fund of funds that is a limited partnership or a flow-through entity will be the country in which the partnership or entity has its central management and control;

•

interest derived by a non-resident as a limited partner in a venture capital limited partnership or an Australian venture capital fund of funds will be subject to withholding tax, even if the partner is regarded as having a permanent establishment in Australia because of the investment;

•

a company that has ceased to be a resident of Australia will be able to have as its auditor a person registered in the country of residence of the company; and

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the Commissioner of Taxation (Commissioner) will be authorised to disclose information to the PDF Board for the purposes of administering venture capital laws.

1.10 Certain eligibility requirements, such as that relating to a company's predominant activity, are ongoing in that an investment must satisfy them at all times to be eligible for the tax exemption. The information a general partner of a venture capital limited partnership or an Australian venture capital fund of funds is required to provide in its annual and quarterly returns will be amended to include a statement as to whether these requirements have been complied with. A similar amendment will be made to the information an eligible investor is required to provide in its annual return.

Comparison of key features of new law and current law

Detailed explanation of new law

Holding companies

1.11 An investment in a holding company is not eligible for the concession because of requirements in the existing law that:

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a company cannot have as it primary activity the receipt of dividends and interest (subsection 118-425(3)); and

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an investee company may only re-invest an eligible venture capital investment in another company that it controls and which meets all the requirements to be an investee company (subsection 118-425(4)).

1.12 The holding company of a company or group will be taken to satisfy the requirements in subsections 118-425(3) and (4) (and be capable of qualifying as an eligible venture capital investment) if certain conditions are satisfied. The holding company must meet the other requirements a company must meet to be an eligible venture capital investment (subsections 118-425(2) and (5) to (7)) for the investment to be eligible for the concession.

1.13 The conditions to be satisfied for a holding company to be taken to satisfy subsections 118-425(3) and (4) depend on whether the investment is being made into:

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a new company established to acquire an interest in an investee company (which may itself be a holding company); or

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the holding company of an existing group.

New holding company

1.14 An acquisition of shares or options by a venture capital limited partnership, Australian venture capital fund of funds or eligible investor in a company formed solely for the purpose of investing in another company (including the holding company of a group) will be an eligible venture capital investment if:

•

within six months of the investment being made the holding company uses the money:

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to acquire shares or options in the other company, including meeting any incidental costs of making that investment, such as legal and stamp duties and company registration costs;

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to pay administrative expenses associated with the investment in the other company, for example, costs relating to engaging employees; or

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to provide loans to the other company; and

•

the company in which the new holding company invests meets the requirements to be an eligible venture capital investment (subsections 118-425(2) to (7)) within that six month period and after the end of the period.

[Schedule 1, Part 1, item 11, subsection 118-425(11)]

1.15 The requirement of the company into which the new holding company invests to meet the eligibility requirements is an ongoing requirement which the general partner or eligible investor will report on in its reports to the PDF Board. [Schedule 1, Part 1, item 11, note to paragraph 118-425(11)(d)]

1.16 If the new holding company becomes the head company of a consolidated or consolidatable group, subsection 118-425(11) will no longer apply to the holding company. The eligibility requirements in subsections 118-425(3) and (4) will apply to the group in the same way as they apply to an existing group (see below). [Schedule 1, Part 1, item 9, subsection 118-425(16)]

Holding company of an existing group

1.17 An investment in shares or options in a company that is the head company of a consolidated group or a consolidatable group can be an eligible venture capital investment if certain conditions are satisfied. Consistent with the consolidation regime, the group is treated as a single entity in determining whether the group satisfies the eligible venture capital investment requirements (subsections 118-425(2) to (7)). Changes to the predominant activity test will allow a group that carries on a range of different activities to satisfy that requirement.

1.18 While the eligible venture capital investment requirements are expressed to apply to a company, they will apply to the head company of a consolidated or consolidatable group. To ensure that the attributes of the whole group are taken into account, the eligibility requirements will be applied as if:

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the head company carried on all the activities that the subsidiaries carry on;

•

the assets, employees and income of the subsidiaries were assets, employees and income of the head company; and

•

each subsidiary was a part of the head company rather than a separate entity.

[Schedule 1, Part 1, item 11, subsection 118-425(12)]

1.19 This provision will have the effect that these attributes of the subsidiary members of the group are included with those of the head company in determining whether a group meets the predominant activity requirements (new subsection 118-425(3)).

Predominant activity

1.20 An investment in shares or options in a company is eligible for the tax exemption if it satisfies the requirements in section 118-425. One of these requirements is that more than 75% of the activities of the company or group, having regard to certain attributes, must not relate to ineligible activities. The following activities are ineligible:

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property development or land ownership;

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finance - to the extent that it is banking, providing capital to others, leasing, factoring or securitisation;

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insurance;

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the construction or acquisition of infrastructure facilities; and

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investments that generate interest, rents, dividends, royalties or lease payments.

[Schedule 1, Part 1, item 11, subsection 118-425(13)]

1.21 A company or group satisfies the predominant activity test if it satisfies at least two of the following requirements:

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more than 75% of its assets (by value) are used primarily in activities that are not ineligible activities;

•

more than 75% of its employees are engaged primarily in activities that are not ineligible activities;

•

more than 75% of its total assessable income, exempt income and non-assessable non-exempt income is derived from activities that are not ineligible activities.

[Schedule 1, Part 1, item 9, subsection 118-425(3)]

1.22 However, if two or more of the criteria are failed, the PDF Board has a discretion to allow the investment to continue to be eligible if the Board determines that:

•

the company's primary activity is not an ineligible activity; and

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the failure is temporary and did not exist at the time of the initial investment and, if the investment has been sold, at the time the investment was sold.

[Schedule 1, Part 1, item 11, subsection 118-425(14)]

Example 1.1

Technology Venture Capital Partners holds shares in Mariner Pty Ltd which manufactures marine engineering equipment on a five hectare property. The area in which the business is conducted has ceased to be an industrial area and has become a desirable residential area. Also, the business has expanded from merely making the equipment to installing it in boats and the company has decided that water access is essential to its business operations.

Mariner Pty Ltd decides to sells its existing premises and move to the coast. It decides that the most profitable way of doing this is to demolish the existing structure and subdivide the land for sale even though it will take at least two years to complete the sale of the land. The business is relocated to the new premises and work begins on developing for sale the land on which the business had been conducted.

At certain periods during the course of redeveloping and selling the old premises, the land represents more than 25% of the company's assets and the profits derived on the sale of lots is more than 25% of the company's total income. Technology Venture Capital Partners neither acquires nor sells any part of its investment in Mariner Pty Ltd during the period it technically fails the predominant activity test.

The general partner of Technology Venture Capital Partners may make an application to the PDF Board for a determination that the company is taken to meet the new predominant activity requirement. If the Board determines that in spite of its land development activity, Mariner Pty Ltd's primary activity is the manufacture and installation of marine engineering equipment and that the failure to meet the two requirements is temporary, it may decide to exercise its discretion under section 25-15 of the Venture Capital Act 2002.

1.23 The value of the assets for the purposes of the predominant activity test is the value shown in the last audited accounts prepared for the company or group for a period ending less than 18 months before that time. If there are no audited accounts, an audited statement prepared in accordance with Australian Accounting Standards that shows the value of the assets within the previous 12 months is required. [Schedule 1, Part 1, item 10, subsection 118-425(10)]

Determination by the Pooled Development Funds Registration Board on predominant activity

1.24 A general partner may apply to the PDF Board to determine for an investment the partnership holds that:

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a company's primary activity is not an ineligible activity; and

•

the company's failure to satisfy at least two of the predominant activity tests is temporary and did not exist at the time the investment in the company was acquired and, if the investment has been disposed of, when it was disposed of.

[Schedule 1, Part 2, item 17, subsection 25-15(1) of the Venture Capital Act 2002]

1.25 The application must be made to the Board in an approved form. [Schedule 1, Part 2, item 17, subsection 25-15(2) of the Venture Capital Act 2002]

1.26 The PDF Board may make principles it will apply in considering whether to make a determination. These principles will be a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. In making a determination the Board will apply principles contained in the instrument. [Schedule 1, Part 2, item 17, subsections 25-15(3), (4) and (7) of the Venture Capital Act 2002]

Review of decision of the Pooled Development Funds Registration Board

1.27 A decision of the Board made under subsection 25-15(1) of the Venture Capital Act 2002 not to make a determination that the company satisfies the primary activity test is a reviewable decision. [Schedule 1, Part 2, item 18, paragraph 29-1(i) of the Venture Capital Act 2002]

Permitted entity value

1.28 An eligible venture capital investment cannot be made into a company (investee company) whose asset value, together with that of any connected entity, exceeds $250 million immediately before the investment is made (subsections 118-425(6) and 118-440(1)). Under the existing law an investment in a company that is acquired from a corporate group or institution whose asset value is greater than $250 million does not qualify for the concession, even if after the investment has been made the value of the assets of the investee company and its connected entities is less than $250 million.

1.29 The permitted entity value is being amended to ignore the total value of the assets of any connected entity that will not be connected with the investee company after the investment has been made. The value of the assets of an entity that will not be connected after the investment is made is also ignored in applying the permitted entity value test to an investment in a company that was connected to a company in which the venture capital limited partnership, Australian venture capital fund of funds or eligible investor made a previous investment (paragraphs 118-440(5)(b) and 118-440(7)(c)). [Schedule 1, Part 1, item 13, subsection 118-440(4)]

Integrity rules

1.30 Integrity rules operate to ensure that treating each investee company as an independent entity in applying the permitted entity value test will not allow large, established potential investee businesses that split into smaller entities with assets valued at less than the eligible limit to be eligible for the exemption. The rules will also deny eligibility for investments to acquire a large corporate group in stages.

Acquisition within 12 months

1.31 An investee company will not satisfy the permitted entity value requirement if immediately before the investment is made:

•

the investee company was connected with a company (linked company) in which the same venture capital limited partnership, Australian venture capital fund of funds or eligible investor made an eligible venture capital investment at any time during the previous 12 months; and

•

the total value of the assets of the investee company (and the assets of any connected entities) at the time the investment is being made and the value of the assets of the linked company (and the assets of its connected entities) at the time the venture capital limited partnership, Australian venture capital fund of funds or eligible investor made its investment in that company exceed $250 million.

1.32 This provision will apply if the linked company and the investee company are connected with each other at any time during the 12 months before the investment is made in the investee company. [Schedule 1, Part 1, item 13, subsection 118-440(5)]

The Commissioner of Taxation's discretion

1.33 However, the investment will be an eligible investment under subsection 118-440(5) if, at the time the investment is made in the investee company, the Commissioner is satisfied that:

•

the activities of the investee company are not the same as, not an integral part of, or not a necessary support for the activities of the linked company; and

•

the making of the investment in the investee company is not part of a scheme to acquire an interest in all or a substantial part of the group of connected companies.

[Schedule 1, Part 1, item 13, subsection 118-440(6)]

1.34 The Commissioner will exercise the discretion if he is satisfied that the companies are not being acquired separately as a means of acquiring all or a substantial part of the group.

1.35 Examples of activities which may be an integral part of or necessary support for other activities include:

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a company which produces goods and a company which markets or distributes those goods;

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a company operating a large cattle station and one that operates a meat processing company; and

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a timber felling company and a company transporting felled timber.

Example 1.2

Venture Capital Partners acquires 100% of the shares in Manufacturing Pty Ltd on 1 October 2004. Manufacturing Pty Ltd produces electrical goods. After the acquisition Manufacturing Pty Ltd has no connected entities and the total value of its assets is $220 million. Immediately before Venture Capital Partners made its investment Manufacturing Pty Ltd was a wholly-owned subsidiary of a corporate group of which Aztec Ltd was the head company. The total value of the assets of the Aztec corporate group was $2 billion.

On 1 May 2005 Venture Capital Partners considers acquiring Aqua Pty Ltd which has been a member of the Aztec corporate group since 1 July 2002. Aqua Pty Ltd has developed a highly innovative low cost process for purifying water. This activity is unrelated to any other activity carried on by the Aztec corporate group and the group has decided to dispose of the company. Its assets are valued at $70 million.

An acquisition of shares in Aqua Pty Ltd by Venture Capital Partners will not be an eligible venture capital investment unless the Commissioner exercises the discretion.

In exercising the discretion, the Commissioner would have to consider the following:

•

whether the two companies conduct the same activities, or their activities are an integral part of or a necessary support for the activities of the other company - this is unlikely in this case as their activities are unrelated; and

•

whether the investment is part of a scheme to acquire an interest in all or a substantial part of the group - in this case it is unlikely this is part of a scheme to acquire a substantial part of the group as a substantial part of the group is left intact after the spin-offs.

Acquisition outside 12 months

1.36 An investee company will not satisfy the permitted entity value requirement if immediately before the investment is made:

•

the investee company was connected with a company (linked company) in which the same venture capital limited partnership, Australian venture capital fund of funds or eligible investor made an eligible venture capital investment more than 12 months previously;

•

the activities of the company are the same as, or an integral part of, or a necessary support for the activities of the other company; and

•

the total value of the assets of the investee company (and the assets of any connected entities) at the time the investment is being made and the value of the assets of the linked company (and the assets of its connected entities) at the time the venture capital limited partnership, Australian venture capital fund of funds or eligible investor made its investment in that company exceed $250 million.

[Schedule 1, Part 1, item 13, subsection 118-440(7)]

Example 1.3

Venture Capital Partners acquires 100% of the shares in Manufacturing Pty Ltd on 1 October 2004. Manufacturing Pty Ltd has no connected entities and the total value of its assets is $220 million. Immediately before Venture Capital Partners made its investment Manufacturing Pty Ltd was a wholly-owned subsidiary of a corporate group of which Aztec Ltd was the head company. The total value of the assets of the Aztec corporate group was $2 billion.

On 1 November 2005 Venture Capital Partners considers acquiring Marketing Pty Ltd which has been a member of the Aztec corporate group since 1 July 2003. The value of the assets of Marketing Pty Ltd is $60 million. The primary activity of Manufacturing Pty Ltd is manufacturing electronic components for industrial equipment and that of Marketing Pty Ltd is the distribution and marketing of those components.

An acquisition of shares in Marketing Pty Ltd by Venture Capital Partners will not be an eligible venture capital investment unless the activities are not the same as, not an integral part of, and not a necessary support for the activities of Manufacturing Pty Ltd. As the activities of the marketing and distribution company are a necessary support for the activities of the manufacturing company, any investment Venture Capital Partners makes in Marketing Pty Ltd would not be eligible for the exemption.

Other changes

Connected entities

1.37 An entity is a connected entity if it is an 'associate' of another entity (subsection 995-1(1)). Thus, under the existing law if a venture capital limited partnership or Australian venture capital fund of funds is making a further investment in a company, other companies in which the venture capital limited partnership or Australian venture capital fund of funds has invested and acquired an interest sufficient to make it an 'associate', will be regarded as being connected.

1.38 To be an eligible venture capital investment, a venture capital limited partnership or Australian venture capital fund of funds cannot invest more than 30% of its committed capital into an investee company. In applying this limit, the total amount that the partnership has invested in equity interests and debt interests in the company and in any of its 'connected entities' is taken into account (paragraph 118-425(1)(d)). A company that is an associate of another company only because of an investment by the same venture capital limited partnership, Australian venture capital fund of funds or eligible investor will not be taken to be an associate for the purposes of paragraph 118-425(1)(d). [Schedule 1, Part 1, item 6, subsection 118-425(1A)]

1.39 An entity that is connected with another entity only because of investments made by the same venture capital limited partnership or Australian venture capital fund of funds will not be taken to be an 'associate' in determining whether the company satisfies the requirement that it may only invest in connected entities (subsection 118-425(4)). [Schedule 1, Part 1, item 8, subparagraph 118-425(4)(a)(i)]

1.40 In determining whether an investment satisfies the permitted entity value requirement, the total value of the company's assets and that of any other entity that is connected with the company are taken into account (subsection 118-440(1)).

1.41 A company into which a venture capital limited partnership, Australian venture capital fund of funds or eligible investor has made an eligible investment will not be taken to be 'connected with' any other company only because of an eligible venture capital investment by the venture capital limited partnership, Australian venture capital fund of funds or eligible investor. The assets of entities that would be connected entities because of eligible investments by the same venture capital limited partnership, Australian venture capital fund of funds or eligible investor are therefore not taken into account in applying the permitted entity value tests in subsections 118-440(1), (5) and (7). [Schedule 1, Part 1, item 13, subsection 118-425(3)]

1.42 Similarly, the assets of entities that would be connected with a linked entity referred to in paragraphs 118-440(5)(b) and 118-440(7)(c) are not taken into account in applying the permitted entity value tests in subsections 118-440(1), (5) and (7). [Schedule 1, Part 1, item 13, subsection 118-425(8)]

Convertible notes

1.43 An investment that is made when a venture capital limited partnership, Australian venture capital fund of funds or eligible investor acquires shares by converting convertible notes issued by an investee company, will be treated as having been made at the time the convertible notes were last acquired by the partnership or eligible investor for the purpose of determining eligibility for the exemption. That is, the investment acquired on the conversion of convertible notes will be tested for eligibility by reference to whether the company met the eligibility requirements in subsections 118-425(2) to (7) at the time the convertible notes were last acquired by the venture capital limited partnership, Australian venture capital fund of funds or eligible investor. [Schedule 1, Part 1, item 12, note to subsection 118-440(1); item 11, new subsection 118-425(15)]

Residency

1.44 The place of residence of a venture capital management partnership is specified to be the country in which the partnership has its central management and control. [Schedule 1, Part 1, item 2, subsection 94D(4)]

1.45 Generally the place of central management and control will be the place at which the general partner or general partners manage and control the partnership on behalf of all the partners.

1.46 The place of residence of a general partner of a limited partnership that is a foreign resident and a company or limited partnership (including a foreign venture capital fund of funds) is the country in which the partnership has its central management and control. [Schedule 1, Part 1, item 5, subsection 118-420(8)]

1.47 The place of residence of a foreign venture capital fund of funds that is a flow-through entity, that is an entity to which paragraph 118-420(5)(a) applies, is the place at which it has its central management and control.

1.48 A foreign venture capital fund of funds that is a limited partnership under the law of the country by which it was established may not be a limited partnership under the definition of 'limited partnership' in the income tax law. In this case, the partnership is an entity that is not taxed as such in its country of residence, but the income is taxed to its members according to their interests in the entity. It is therefore an entity to which paragraph 118-420(5)(a) applies. Its place of residence is the place at which the partnership has its central management and control. [Schedule 1, Part 1, item 5, subsection 118-420(9)]

Withholding tax - interest

1.49 Interest derived by a non-resident is not subject to withholding tax if it is derived at or through a permanent establishment of the non-resident in Australia. The net amount of interest is taxed at the investor's marginal tax rate.

1.50 Interest derived by a limited partner in a venture capital limited partnership or Australian venture capital fund of funds as a partner in the venture capital limited partnership or Australian venture capital fund of funds will be subject to withholding tax, even if the partner is regarded as having a permanent establishment because of the investment in the venture capital limited partnership or Australian venture capital fund of funds. [Schedule 1, Part 1, item 3, subparagraph 128B(3)(h)(ii)]

Auditors

1.51 A company's auditor must be registered as an auditor under a State or Territory law. If the company has ceased to be an Australian resident, its auditor must be registered as a company in the country of residence of the investee company. This is an ongoing requirement which a general partner of a venture capital limited partnership or an Australian venture capital fund of funds and an eligible investor is required to report on in annual and some quarterly reports. [Schedule 1, Part 1, item 9, subsection 118-425(5)]

Disclosure of information

1.52 The income tax law provides that the Commissioner may communicate information to various recipients, and in the case of each recipient, the purpose for which the information may be communicated (subsection 16(4)). This provision will be amended to permit the communication of information to the PDF Board for the purposes of the administration of laws relating to venture capital. [Schedule 1, Part 1, item 1, paragraph 16(4)(m)]

Venture Capital Act 2002 changes

1.53 Information relating to ongoing eligibility requirements for an eligible venture capital investment is to be included in reports to the PDF Board. Ongoing eligibility requirements are:

•

the predominant activity test (subsection 118-425(3));

•

the restriction on investing in other companies (subsection 118-425(4));

•

the company's auditor to be registered (subsection 118-425(5)); and

•

the requirement of a company into which a holding company was formed to invest to meet the eligibility requirements (paragraph 118-425(11)(d)).

1.54 If a venture capital limited partnership or Australian venture capital fund of funds holds an investment in a company for the whole of the financial year, the general partner must include a statement in the annual return as to whether the company met each ongoing eligibility requirement at all times during the financial year. [Schedule 1, Part 2, item 14, paragraph 15-1(ga) of the Venture Capital Act 2002]

1.55 When a venture capital limited partnership or Australian venture capital fund of funds makes an eligible investment in a company, the general partner must include in the next quarterly return a statement as to whether the company met each ongoing eligibility requirement at all times during the quarter after the investment was made. [Schedule 1, Part 2, item 14, paragraph 15-10(c) of the Venture Capital Act 2002]

1.56 When a venture capital limited partnership or Australian venture capital fund of funds disposes of an eligible investment in a company, the general partner must include in the next quarterly return a statement as to whether the company met each ongoing eligibility requirement at all times during the quarter up to the day the investment was disposed of. [Schedule 1, Part 2, item 14, paragraph 15-10(d) of the Venture Capital Act 2002]

1.57 An eligible investor must include in its annual return a statement as to whether each investment made in a company met each ongoing eligibility requirement at all times:

•

during the year in the case of an investment held for the whole year;

•

during the period after the investment was made in the case of an investment acquired during the year; and

•

during the period until the investment was disposed of.

[Schedule 1, Part 2, item 16, paragraphs 21-20(g), (h) and (i) of the Venture Capital Act 2002]

Application and transitional provisions

1.58 The amendments apply to capital gains tax events relating to investments made on or after 1 July 2002 which is the date the venture capital regime commenced. [Schedule 1, Part 2, item 19]