Dear SBA, I have been thinking about how to create a Tax Free Income Fund and I would like some feed-back.
By creating an Early Stage Venture Capital Limited Partnership (ESVCLP) offers the the possibility of matching funding from the government and a significant tax breaks. By combining high yielding debt / preference shares can you 'wash' the tax liability? Eg Theoretical Portfoilo $10 Million total $1 Million - into Startmate / YCombinator-type startups $5 Million into high yield debt - over 20% pa $2 Million into Credit Union preference shares - return up to 8% full franked $2 Million into unlisted mining companies Expected value of the portfolio $10 Million Web startups: Zero or ($10 Million if we win the lottery) High Yield debt: $7 Million Credit Union Shares: $2 Million Unlisted mining companies: $1 Million or ($30 Million if we win the lottery again) In Australia, Venture Capital as an asset-class destroys lots of money.The track record is appalling. >From AusIndustry website: "Fund managers seeking to raise a new venture capital fund of at least $10 million and not more than $100 million for investing in Australian businesses may be eligible for ESVCLP registration. Registration entitles a fund to flow-through tax treatment and its investors (whether resident or non-resident) receive a complete tax exemption on their share of the fund's income (both revenue and capital). Australian businesses with assets of less than $50 million may be able to access capital from funds registered under this program if their primary activity is not finance or property development." A quick summary of the rules are no investment may exceed 20% of the fund, ie minimum of 5 investments. Every so often, the government grants dollar for dollar matching of investments funds. Minimum size of fund $10 Million etc. It takes about a year and about $100K to establish a ESVCLP. The ESVCLP was never designed for Income funds and I know that AusIndustry will whine but if I stay within the guideline I can create an innovative funding vehicle for new ventures. Any thoughts / comments? Richard Hayes -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://groups.google.com/group/silicon-beach-australia/msg/351e183e1303508d?hl=en%3Fhl%3Den No lurkers! It is expected that you introduce yourself. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
