The Treasury has recently released draft changes (Exposure Draft - Treasury Laws Amendment (Measures for a later sitting) Bill 2017: Fintech and Venture Capital Amendments and accompanying Exposure Draft Explanatory Material) to the venture capital and early stage tax concession provisions in the Income Tax Assessment Act 1997 (ITAA) to ensure that start-up fintech businesses are eligible for venture capital investment tax concessions, in addition to making some other minor technical amendments to confirm the provisions of the ITAA are operating consistently with policy intent. 

Under the current ITAA, venture capital tax concessions are not available for investments into companies whose activities predominantly consist of finance or insurance activities (which includes banking, providing capital to others, leasing, factoring and securitisation). This has limited the extent to which venture capital investments are made in start-up fintech firms.  The proposed changes will remove such limitations by enabling early stage venture capital limited partnerships and venture capital limited partnerships to invest in early stage companies that have finance or insurance activities as their predominant activities.  Investments in unit trusts that have finance activities as the predominant activity will remain excluded from the venture capital tax concession.