PDF feast for hungry super funds
Capital-hungry small enterprises and superannuation funds keen to invest in ven-ture capital businesses have both been given a boost through concessions offered for Pooled Development Funds (PDFs) announced in the recent federal budget.
As part of the government's initiative to improve the attractiveness of PDFs as an investment vehicle, PDFs will now permit widely-held Australian superannua-tion funds to wholly own a PDF. Prior to May 11, 1999, widely-held super funds could only hold 30 per ce
Capital-hungry small enterprises and superannuation funds keen to invest in ven-ture capital businesses have both been given a boost through concessions offered for Pooled Development Funds (PDFs) announced in the recent federal budget.
As part of the government's initiative to improve the attractiveness of PDFs as an investment vehicle, PDFs will now permit widely-held Australian superannua-tion funds to wholly own a PDF. Prior to May 11, 1999, widely-held super funds could only hold 30 per cent of the issued shares in a PDF. However, self-managed super funds will continue to be allowed to own only 30 per cent of a PDF.
Superannuation funds are now on a level playing field with banks and life compa-nies that have always been permitted to hold 100 per cent.
According to Minister for Industry, Science and Resources Senator Nick Minchin, the changes are designed to increase the appeal of PDFs to complying Australian superannuation funds, overseas pension funds and to other investors to increase the supply of patient equity and venture capital to growing small enterprises.
To be eligible for PDF status, the trustees must submit a capital raising plan and investment plan for approval by the PDF Registration Board of the Common-wealth Department of Industry, Science and Technology.
The PDFs receive favourable tax treatment, with a 15 per cent tax rate for in-come earned from their small or medium enterprise investments. For investors, dividends from PDFs and any capital gains from the sales of PDF shares are tax-free. PDFs may only invest in Australian companies with less than $50 million in assets.
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