 | A little more than one year ago the Corporations and Capital Markets Advisory Committee (CAMAC) - the Australian Financial Authority - released drafted rules for online investing in the Country, which among other measures, proposed to cap retail investments at AUD $10000 annually and to limit the capital that companies can raise up to AUD $ 2 millions in a 12 month period. |
Since then, the Government has not taken any action but has publicly stated the importance of creating a specific legal framework for the growing phenomenon in several occasions, the last of which was not long ago in the context of its response to the Financial Systems Inquiry.
Within its answer to the Financial Systems Inquiry, the Australian Government has announced that regulations for securities crowdfunding are a high priority and that it intends to publish them by the end of 2015. This news is of course a good one for all the stakeholders involved in the sector, which have been waiting since 2013, while they observed other nearby countries, like New Zealand, adopting ad hoc frameworks.
However, some questions still remain open, for example, the taxation treatment of equity crowdfunding. The Australian Taxation Office (ATO) has not released any binding guidance on the application of the current tax legislation to equity crowdfunding, but has only provided indication on reward crowdfunding. Nevertheless, it can be expected that, similarly to what is going on in other Countries where online investing is allowed, capital raised via digital investment portals will be treated for tax purposes as paid-in capital for new companies, which means that neither the investor nor the company will be subject to tax at the time of purchase, but the investor will be liable to capital gains or losses when the shares are sold.
The tax issue will be cleared once the government ends the consultation on the appropriate legal framework for equity crowdfunding, given that the local Taxation Office will then release an updated tax fact-sheet. In the meantime, the local online investing actors are waiting for the specific legal framework that will eventually allow to unleash the full potential of this alternative source of financing for local innovators.
References
Alderman,P. (2015). Taxation issues and equity crowdfunding in Australia. Lexology.
Alois, JD. (2015).Equity Crowdfunding One Step Closer in Australia. Crowdfundinsider
Nicholas, J. (2015). We should have legislation in crowdfunding by the end of the year. Business Insider Australia.
Photo Credit to: Michael McDonough
Within its answer to the Financial Systems Inquiry, the Australian Government has announced that regulations for securities crowdfunding are a high priority and that it intends to publish them by the end of 2015. This news is of course a good one for all the stakeholders involved in the sector, which have been waiting since 2013, while they observed other nearby countries, like New Zealand, adopting ad hoc frameworks.
However, some questions still remain open, for example, the taxation treatment of equity crowdfunding. The Australian Taxation Office (ATO) has not released any binding guidance on the application of the current tax legislation to equity crowdfunding, but has only provided indication on reward crowdfunding. Nevertheless, it can be expected that, similarly to what is going on in other Countries where online investing is allowed, capital raised via digital investment portals will be treated for tax purposes as paid-in capital for new companies, which means that neither the investor nor the company will be subject to tax at the time of purchase, but the investor will be liable to capital gains or losses when the shares are sold.
The tax issue will be cleared once the government ends the consultation on the appropriate legal framework for equity crowdfunding, given that the local Taxation Office will then release an updated tax fact-sheet. In the meantime, the local online investing actors are waiting for the specific legal framework that will eventually allow to unleash the full potential of this alternative source of financing for local innovators.
References
Alderman,P. (2015). Taxation issues and equity crowdfunding in Australia. Lexology.
Alois, JD. (2015).Equity Crowdfunding One Step Closer in Australia. Crowdfundinsider
Nicholas, J. (2015). We should have legislation in crowdfunding by the end of the year. Business Insider Australia.
Photo Credit to: Michael McDonough
 | About the author - Irene Tordera Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives. During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem and she works also for the European Crowdfunding Network. |
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