Australia’s venture capital tax framework could become significantly more accessible to growing businesses under exposure draft legislation released by Treasury in September 2026.
The proposed reforms would increase key investment and fund thresholds applying to Venture Capital Limited Partnerships (VCLPs) and Early Stage Venture Capital Limited Partnerships (ESVCLPs). Announced as part of the 2026–27 Federal Budget, the changes are intended to help unlock patient capital for young and expanding Australian businesses.
For founders considering future funding rounds, early assessment with an experienced accountant Box Hill businesses can work with may help identify how the proposed rules could affect capital-raising and tax planning, especially considering the upcoming changes to the CGT. Treasury consultation – Expanding tax incentives for venture capital schemes
What Is Changing for VCLPs and ESVCLPs?
Subject to legislation being enacted, the new thresholds are proposed to apply from 1 July 2027.
The key changes are:
- ESVCLP investee asset threshold: increasing from $50 million to $80 million
- VCLP investee asset threshold: increasing from $250 million to $480 million
- ESVCLP maximum fund size: increasing from $200 million to $270 million
- ESVCLP tax incentive threshold: increasing from $250 million to $420 million, being the threshold relevant to whether certain investment returns can qualify for a full tax exemption
Treasury notes that most of the existing caps have not been updated since the venture capital programs were introduced in the 2000s. The higher limits are therefore designed to better accommodate young businesses requiring larger amounts of capital as they expand.
What Could the Changes Mean for Start-ups?
The higher thresholds could allow more growing businesses to remain within the venture capital framework as they raise capital and increase in value.
In practical terms, a company that would otherwise exceed an existing investee asset threshold may have greater scope to receive investment through an eligible VCLP or ESVCLP once the proposed limits take effect.
However, the asset thresholds are only part of the eligibility framework. Businesses and investors still need to consider the broader legislative requirements applying to qualifying venture capital investments and partnership structures. Working with a Box Hill accountant alongside appropriate legal and investment advisers can therefore be important before structuring a transaction.
What Should Investors and Fund Managers Consider?
The reforms would also provide greater capacity within the ESVCLP regime, with the maximum fund size proposed to rise to $270 million.
Treasury has positioned the measures as a way to unlock additional patient capital for young, expanding firms. The Government also proposes closing the Eligible Venture Capital Investor program to new applications, with that closure applying from 7:30 pm AEST on 12 May 2026. Treasury venture capital reform details
Investors and fund managers should therefore consider both the expanded partnership thresholds and the transition away from the Eligible Venture Capital Investor program when reviewing future investment structures.
These Changes Are Not Yet Law
Importantly, the measures remain exposure draft legislation. Treasury’s consultation opened in September and submissions close on 28 September 2026.
This means businesses should not make investment or restructuring decisions on the assumption that the draft provisions will necessarily be enacted in their current form.
How Infinity Solution Tax Plus Can Help
For founders and growing businesses planning future capital raises, early tax and accounting advice can help identify potential eligibility issues before negotiations with investors begin.
Infinity Solution Tax Plus, as a trusted Box Hill accountant, can support businesses with tax planning, financial reporting, business structuring and preparation for growth and investment. Where venture capital arrangements involve specialist legal or investment considerations, coordinated professional advice can also help businesses approach transactions with greater clarity.
Final Thoughts
The proposed venture capital reforms represent a substantial increase in several long-standing thresholds and could broaden the range of Australian businesses able to access investment through VCLP and ESVCLP structures from 1 July 2027.
With consultation continuing until 28 September 2026 and the measures still subject to the legislative process, founders, investors and advisers should monitor developments closely. Early preparation with a trusted accountant in Box Hill can help businesses understand how future tax changes may interact with their funding and growth plans. Treasury consultation hub
Disclaimer: This article contains general information only and does not constitute financial or taxation advice. You should seek personalised advice from a registered tax or financial professional.
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