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10.2.1. Pooled Development Funds

An incentive program was introduced for pooled development funds (PDFs) designed to encourage the growth of small and medium businesses by providing incentives for funds that invest in the equity capital of start-up and operating Australian resident enterprises with total assets of up to AUD 50 million. The PDF program was closed to new applicants with effect from 21 June 2007 but remains in operation for already registered eligible companies. The program has been progressively replaced by that for venture capital investments (see below).

Though generally taxable in the same manner as any other company, a PDF is entitled to various incentives, including the following:

  • a reduced corporate tax rate of 15% on the SME component of its income. The income from other components are taxed at the rate of 25%;
  • exemption from withholding taxes on dividend distributions made to non-resident shareholders; and
  • exemption of gains on the disposal of PDF shares from capital gains tax.