10 May 2006

UQ Business School Professor Peter Liesch believes the Federal Budget will attract additional funds into the venture capital market to support enterprise.

He said the Early Stage Venture Capital Limited Partnership (ESVCLP) scheme, to be introduced on July 1 this year, would replace the existing venture capital pooled development funds arrangements.

“The ESVCLP system will provide investors in the venture capital market with a complete tax exemption on capital gains and revenue gains, however, investment losses will not be tax deductible.”

He said restrictions would apply for investors, mainly related to the share an individual investment could hold in relation to the ESVCLP`s capital and the ESVCLP fund size.

“In addition, some restrictions relating to the current Venture Capital Limited Partnership will be eased,” he said.

“The effect of these changes and initiatives will be to attract additional funds into Australia`s venture capital market, critical for supporting start-up companies which are increasingly dotting Australia`s enterprise landscape.

“Historically, the resource constraints faced by small enterprise in Australia have limited some firms’ capacity to realise their development potential.

“These Budget initiatives will go some way to addressing the problem and will indirectly contribute to the broader-ranging Backing Australia’s Ability initiatives."

For more information contact Cathy Stacey at UQ Business School on 0434 074 372 or 3365 6179