Are there any specific modifications or arrangements we need to incorporate into the Australian Unit Trust structure to facilitate eligibility for UK tax reliefs?

Impact of Jurisdiction:

How does the fact that the Unit Trust is based in Australia affect the eligibility for UK tax reliefs for UK investors?

Are there any additional reporting or compliance obligations for UK investors due to the cross-jurisdictional nature of the investment?

Dividend and Capital Gains Tax Treatment:

How are dividends and capital gains from the Australian Unit Trust taxed for UK investors?

Is there a provision for tax credits or relief for taxes paid in Australia under the double taxation treaty between the UK and Australia?

Investors' Relief and EIS Specifics:

For Investors' Relief, what are the implications of holding shares indirectly through a trust, and how does the minimum holding period apply?

For EIS, are there specific conditions related to the company's size, trading activities, and the period for which shares must be held that we should be aware of?

Exit Strategy and Tax Implications:

What are the tax implications for UK investors when they exit their investment through the Australian Unit Trust?

Are there any specific considerations or strategies we should be aware of to optimize tax outcomes for UK investors upon exit?

Documentation and Compliance:

What documentation and records should we maintain to ensure compliance with UK tax laws and to support claims for tax reliefs?

Are there any periodic filings or disclosures required in the UK for UK investors in the Australian Unit Trust?

Basically, we need to figure out:

In what circumstances might a UK company withhold tax, therefore triggering an event which means that we need to add complexity via double taxation treaty etc. My understanding is that neither dividends, nor exit should trigger this, as long as the startup isn’t in the property business.

The extra question is:

Can we get investors relief e.g. 10% CGT rate?

If the trust is paying for equity in the businesses, can we get SEIS or EIS in eligible businesses? Even if I actually didn’t put any cash in myself? e.g. I get units in the trust through sweat equity, so am I still eligible?

Truly transparent? e.g. taxed as CGT rather than it becoming income tax? Yes, correct, there is no instance where this would be the case, except for dividends, but if this were to occur, the double tax treaty would be in place, so this would mitigate this, if it were to occur (very rare due to it being startups).

Any scenarios where tax might be withheld thus causing much more complexity? example is property based businesses. No other scenarios, so this isn’t something to worry about

Investors Relief? This is the one area where he’s unsure of this.

How does SEIS and EIS work in this convoluted scenario? It’s possible that it would work - you’d need a separate vehicle/tracking/tranche which follows the UK investors, e.g. for each investment we make into a business, the amount of the investment used for this will be split among the investors, allowing them to reclaim it. For instance, we have 10 investors total, each with 10% of the trust, 2 are in the UK. When the trust buys equity in the startup, with 10% of the trusts reserves, those two investors can then claim S/EIS relief for 10% of their investment (the trust holds 100K of which 10K is put in by 1 UK investor, then 10K of the 100K is used to get startup in that first company (10%), so in effect that 1 UK investors’ 10K that they put in is having 1K of that being used for the purchase, therefore they can claim S/EIS on that cash allocation. The complexity of implementing might make this not worthwhile.

business assets disposal relief - used to be called Entrepreneurs relief, but recently renamed.

The only part that he wasn’t yet clear on is entrepreneurs relief.

In terms of engaging with him, he’s up for it, but the problem would be ascertaining the scope of the work required specifically - what do we want him to do and how much will it costs.

He’s happy to jump on a call with the Australian lawyer to work on this, if needed, but I think it would be fair/important to pay him in that scenario.

22-5-24 - Issuance options

In short, it’s very difficult to issue additional units to investors after the first round - it becomes a taxable event.

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