Information for registered partnerships

Some partnerships are granted conditional registration if they don’t meet all requirements at the time of application, but their application suggests they will meet all requirements within 24 months. 

You will be informed by the department through a decision letter. The letter will detail the parts of the application requiring amendments before returning for full registration.

Making investments and claiming tax benefits while conditionally registered

A conditionally registered partnership can make eligible venture capital investments in line with the legislation. However, the partnership must become registered for the tax benefits to apply. The registration is then backdated to the date conditional registration  was granted.

For more tax information, see the ATO's Venture capital limited partnerships advice. 

You have up to 24 months to meet the registration requirements. You'll need to:

1. address the recommendations in your departmental decision letter
2. submit a new application. 

If your conditional registration lapses

Conditional registration lapses if your partnership does not meet the registration requirements after 24 months. 

We cannot extend this time, but your partnership can reapply for registration. 

We want to stay connected, hear about your experience, celebrate your successes and in some cases, promote them. 

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All partnerships must complete: 

• quarterly returns
• annual returns.

ESVCLPs also need to complete: 

• annual reports.

See more about reporting requirements in the Complete your reporting section below.

ESVCLPs need an appropriate investment plan. The investment plan needs to: 

• set out the partnership's intended investment activities; and 
• show that the investment activities focus on making eligible venture capital investments in early stage businesses.

Once registered, you’ll need to make sure all your investments are in line with your approved investment plan. 

Investment plan updates

Conditionally registered or registered ESVCLPs can amend their investment plan. To do this, you need to provide an updated copy of the investment plan to the department for consideration. The plan will then need to be approved by IISA.  

Note: VCLPs also need an investment plan that outlines its intended investment activities as part of its partnership agreement, but this doesn't need to be approved by IISA. 

VCLPs and ESVCLPs are responsible for the eligibility of their investments. Eligibility can be found under the subdivision 118-F of the ITAA 1997. Some key areas are as follows.

Your investments must:

• be at-risk
• represent no more than 30% of the partnership’s committed capital at the time of investment
• be in an Australian business or unit trust (see Exception to Australian location test)  
• be in the form of new shares or units, or options to acquire shares or units or convertible notes with equity characteristics (see SAFE note)
• be a permitted loan or a debt interest.

The business you are investing in must:

• have total assets of no more than $250 million for VCLP investments or $50 million for ESVCLP investments
• have at least 50% of its employees and at least 50% of its assets in Australia
• have a registered auditor, if the entity value is more than $12.5 million
• be unlisted (or will be delisted within 12 months if a VCLP investment)
• in the case of holding companies, partnerships must ensure the ultimate investee meets the investment requirements.

ESVCLPs must also comply with the approved investment plan and make investments into businesses that are in the early stage of development. This can be:  

• pre-seed
• seed
• start-up
• early expansion.

The investment must not be in a business if the business’ predominant activity is:

• property development
• land ownership
• finance (see Fintech amendments)
• insurance (see Fintech amendments)
• construction or infrastructure
• to make investments to receive interest, rents, dividends, royalties or lease payments (see Fintech amendments).

Investments subject to certain circumstances

Fintech amendment

Fintech amendments have been made to the ITAA 1997 and VC Act to allow investments in finance and insurance businesses where a specified activity is a substantially novel application of one or more technologies.

Australian location test

There is provision for a partnership to invest up to 20% of its committed capital in businesses that do not meet the Australian location test. Investments are considered cumulatively, and each investment must be revalued at the time of a subsequent foreign investment. 

For more information see:

• ESVCLP Customer information guide (Section 5.2.5)
• VCLP Customer information guide (Section 4.2.4).

SAFE note investments

• have the characteristics of a convertible note
• not be a debt interest.

See SAFE note investments.

Debt interests

A debt interest is only an eligible investment if it’s a permitted loan. For more information see your partnership information guide.  

Once established, your partnership needs to meet the following eligibility criteria to remain registered as either an ESVCLP or VCLP as per the VC Act.   

General eligibility requirements

• Has a general partner(s) that is a resident of either Australia or a country with which Australia has a double tax agreement.
• Only conducts activities related to being a VCLP or ESVCLP respectively.
• Ensures the partnership remains in existence for more than 5 years and less than 15 years. 
• Has access to appropriate venture capital management expertise. Not relevant to VCLPs.

Partnership agreement requirements 

• Requires partners to contribute capital when required.
• Prohibits the addition of new partners except as provided for in the agreement.
• Prohibits increases in committed capital except as provided for in the agreement.
• Confers on a general partner the right to require partners to contribute their committed capital to the partnership.
• Includes a plan that outlines its intended investment activities.

Investment plan requirements

• ESVCLPs need an appropriate investment plan focused on making early stage venture capital investments. This plan must be approved by IISA or its delegate. Not relevant to VCLPs.

Committed capital requirements

• It must have at least $10 million committed capital.
• It must have no more than $200 million. Not relevant to VCLPs. 
• A limited partner (or associates) cannot provide more than 30% of a partnership's committed capital without IISA's prior approval. Not relevant to VCLPs.

Over the lifetime of your partnership, you must update the department on any changes that could affect your registration as a VCLP or ESVCLP. These changes relate to the following.

Identified partnership members and contact details

We only give information to identified partnership members, so contacts need to be kept up to date. If we can’t contact you, you may miss important updates and impact your ability to meet registration obligations.

ILP certificate changes

If information on the ILP certificate has changed, then the partnership must provide a copy of the updated ILP certificate to the department for processing. This includes changes to: 

• the name of the partnership
• who the General Partner(s) is
• the registered address.

Investment plan updates

Registered ESVCLPs can amend their investment plan by notifying the department of any changes to the document. This update will then need to be approved by IISA.

Converting foreign currency to AUD

The currency conversion should be at the time of investment or valuation. The partnership will need to provide their rationale and evidence of their conversion if requested. 

Conversion of convertible notes to equity

The conversion of a convertible note should not be reported as a new investment on the investment tab in all returns. Information about the conversion can be reported when a disposal of the investment occurs.

Disposal of a permitted loan

Put the interest into the 'Other proceeds' field in the disposals tab. Note: A loan must be repaid within 6 months if it is the first investment into the investee or unless they have an extension approved by the Committee.

Investing through a holding company

If the investment has been made through a holding company structure, then report the details of the target investee in the investment warrant tab, not the details of intermediate holding companies.

At the end of your registration, you need to complete wind-up activities. Wind-up activities are standard business practices as per your individual partnership deed and your state registration as a Limited Partnership. 

Partnerships may request revocation at any time before their ESVCLP or VCLP expires. The department will also contact partnerships as they reach the end of the 15 year limit. 

There's legislation, external links, detailed guides and more you’ll need to use during your time as a partnership, some of these which are relevant to all partnerships include:

• Venture Capital Act 2002 (VC Act)
• Income Tax Assessment Act 1997 (ITAA 1997)
• Industry Innovation and Science Australia (IISA)
• Venture Capital dashboard

See the program pages for guidelines and more resources on each partnership type:

• Early Stage Venture Capital Limited Partnerships (ESVCLP)
• Venture Capital Limited Partnerships (VCLP)