How will the tax offset work in practice?

Jessica’s startup, PaySmart Pty Ltd, is moving to the next stage of development. Jessica has successfully developed a working prototype of her on-time bill payments software application with assistance from Alex, her early stage (angel) investor. She is now looking to commercialise her software and needs a further injection of capital. She is hoping to raise $5 million in equity funding.

Jessica receives funding from a range of venture capital funds, including a new ESVCLP (called A-OK Ventures). Moores Trust invests $500,000 into A-OK Ventures (alongside other investors) and A-OK Ventures invests this capital in the same income year. The 10 per cent non-refundable tax offset available under the new arrangements will reduce the tax payable by the beneficiaries of Moores Trust by $50,000.