A VCLP is a venture capital fund which aims to stimulate Australia’s venture capital sector by attracting foreign investors.
Venture Capital Limited Partnerships (VCLP)
A Venture Capital Limited Partnerships (VCLP) is a venture capital fund structured as a limited partnership that makes equity investments in eligible Australian growth companies.
Innovation Australia’s Innovation Investment Committee registers VCLPs under the Venture Capital Act 2002.
Generally, a VCLP can invest in Australian businesses with total assets of not more than $250 million by acquiring shares, options or units. The businesses they are investing in must have either a company or unit trust business structure. A VCLP may also invest in unlisted companies or unit trusts that will delist within 12 months.
The programme is enabled by the:
- Venture Capital Act 2002 (VCA); and
- Income Tax Assessment Act 1936 and 1997 (ITAA36 and ITAA97)
The programme commenced in December 2002 with the passing of the VCA and amendments to the ITAA36 and ITAA97. It is jointly administered by the Committee with the support of AusIndustry and the Australian Taxation Office (ATO).
Venture Capital Limited Partnerships (VCLP) aims to increase foreign investment in the Australian venture capital sector. It provides certain foreign investors with tax exemptions on the profits on their investments.
Fund managers planning to raise a VCLP of at least $10 million can apply to the Committee to register the partnership as a VCLP.
A VCLP is entitled to:
- flow-through tax treatment (it is not a taxing point) and
- its eligible foreign investors do not pay capital gains tax on their share of returns the VCLP makes from eligible venture capital investments.
Returns to domestic investors are taxed and a deduction for any losses may be allowable.
You can apply for a VCLP if you:
- are an incorporated limited partnership
- are established in Australia or a foreign country that has a double tax agreement with Australia
- have a general partner who is a resident of either Australia, or a foreign country that has a double tax agreement with Australia and
- have at least $10 million committed capital.
To register a VCLP, a partnership must:
- be structured as a limited partnership
- be established in Australia or a country with which Australia has a double tax agreement.
- have a partnership agreement that:
- remains in existence for not less than five years and not more than 15 years
- requires partners to contribute capital when required
- prohibits the addition of new partners except as provided for in the agreement
- prohibits increases in committed capital except as provided for in the agreement
- confers on a general partner the right to require partners to contribute their committed capital to the partnership
- includes a plan which outlines its intended investment activities
- has a general partner that is a resident of either Australia, or a foreign country that has a double tax agreement with Australia
- has at least $10 million committed capital (a partnership that does not satisfy this requirement may be eligible for conditional registration)
- does not hold any investments.
Applications open on an ongoing basis.