Australia’s FinTech Regulatory Sandbox Now Open – Introduction of new Bill puts measures in place to begin easing regulatory burden on FinTech start-ups.
On 15 October 2019, the Treasury Laws Amendment (2018 Measures No 2) Bill 2019 (Bill) passed the House of Representatives and has now been introduced to the Senate.
The Bill was introduced as part of the Morrison Government’s plan to stimulate and encourage innovation in the Australia Fintech market. It specifically targets start-ups that wish to design new financial products and services and removes some of the regulatory hurdles that would otherwise hinder those start-ups.
Currently, the law provides that unconditional exemptions to the requirement to obtain an Australian Financial Services Licence or Australian Credit Licence may be set out in regulations made by the Government.
However, the Bill amends the Corporations Act 2001 and the National Consumer Credit Protection Act 2009 to allow Government to set out conditional exemptions to the respective licence regimes under both Acts, which provides the Government with the flexibility to change the law in accordance with changing marketplace conditions, and which signifies the commencement of the implementation of the framework that will allow the Government to decrease the regulatory burden on start-ups in this space.
Additionally, the Bill clarifies laws contained in the Income Tax Assessment Act 1997 (ITAA 97) and the Income Tax Assessment Act 1936 (ITAA36) in respect of Venture Capital Limited Partnerships (VCLP), Early Stage Venture Capital Limited Partnerships (ESVCLP) and tax offsets in relation to early stage investors.
These changes include:
clarifying the calculation of capital proceeds in relation to section 118-408 of the ITAA 97 and the partial exemption for certain capital gains in this respect;
clarifying the “additional investment requirements” under section 118-428 of the ITAA 97 for ESVCLPs with regards to preowned investments;
providing that managed investment trusts may now invest in ESVCLPs or VCLPs;
on the basis that a public trading trust cannot be a managed investment trust under the ITAA 36, ensuring that for the purposes of ascertaining whether an entity is a public trading trust, a managed investment trust that invests in an ESVCLP or VCLP, amongst other things, will not be accounted for; and
qualifying the availability of and provisions in relation to the early stage investor offset.
For more information on these changes or for general advice in relation to VCLPs or ESVCLPs, obtaining an AFSL or ACL, or accessing start-up and tax offset concessions, please contact:
Paul Gray
Principal Lawyer
T: 03 5225 5231
E: pgray@ha.legal
Alexander Gulli
Lawyer
T: 03 5226 8573
E: agulli@ha.legal
