The Australian Government has announced a new pathway to permanent residency in Australia for entrepreneurs.
The new pathway is the Entrepreneur stream of visa subclass 188, and is available for entrepreneurs who want to develop or commercialise their innovative ideas in Australia, and who have A$200,000 in funding from a specified third party.
Applications must be nominated by a State or Territory Government in Australia.
More specifically, applicants must:
- Be under 55 years of age, although a State or Territory Government can waive this requirement if the proposed “Complying Entrepreneur Activity” will be of exceptional economic benefit to the nominating State or Territory
- Have competent English, and be able to provide evidence of this at the time the visa invitation is issued
- Be undertaking – or proposing to undertake – a “Complying Entrepreneur Activity” in Australia, and have a genuine intention to continue this activity
A Complying Entrepreneur Activity is an activity that relates to an innovative idea that will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia.
This activity must not relate to any of the following excluded categories:
- Residential real estate
- Labour hire
- Purchase of an existing enterprise or a franchise in Australia
An activity is a Complying Entrepreneur Activity if all of the following requirements are met:
- The applicant has one or more legally enforceable agreements to receive funding with a total of at least A$200,000 from one of the following entities:
- A Commonwealth Government agency
- A State or Territory Government
- A Publicly Funded Research Organisation
- An investor registered as an Australian Venture Capital Limited Partnership, or an Early State Venture Capital Limited Partnership
- A Specified Higher Education Provider
- Under the agreement at least 10 per cent of the funding must be payable to the entrepreneurial entity within 12 months of the day the activity starts to be undertaken in Australia
- The applicant held at least a 30 per cent interest in the entrepreneurial entity when entering into the agreement
- The applicant has a business plan for the entrepreneurial entity noting how the innovative idea will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia.
The outcome of a successful application will be a provisional visa under subclass 188, permitting a stay in Australia of 4 years and 3 months.
In common with visas granted under the other streams of subclass 188, permanent residency for most will be secured through a subclass 888 visa.
Key requirements for the granting of a permanent residency visa under the Entrepreneur stream of subclass 888 include demonstrating a successful record of entrepreneurial activities in Australia.
A successful record of entrepreneurial activity will be measured by a combination of “key success factors” and “supporting success factors.”
Applicants for the subclass 888 visa will need to demonstrate the completion of at least two key success factors, or a combination of one key success factor and three supporting success factors.
Key success factors include:
- Employing two or more Australians, permanent residents or other eligible persons
- Generating an annual turnover of at least A$300,000
- Filing a provisional patent or acquiring a standard or innovation patent
- Receiving ongoing funding or investment in the entrepreneur activity
- Entering into a partnership with a University
- Selling an entrepreneurial venture for A$2,000,000
Supporting success factors include:
- Diversifying entrepreneurial activities into other business areas
- Receiving a statement of success from a State or Territory Government nominator
- Receiving sponsorship from the corporate sector
- Starting at least one other business or contributing to at least two other businesses
- Receiving formal awards or recognition
- Raising or contributing to social capital
As with the subclass 188 visa, for a successful subclass 888 visa application the activity undertaken must not relate to any of the excluded categories:
- Residential real estate
- Labour hire
- Purchase of an existing enterprise or a franchise in Australia
We take this opportunity to remind intending applicants for a subclass 188 stream (whether under the Entrepreneur stream, or any of the other streams under subclass 188) that the 188 visa is technically a temporary residency visa, so there are also tax planning advantages available, particularly in respect of income and capital gains arising outside Australia.
Tax planning and business structuring advice is available through our partner business, GM Tax.
If you are interested in discussing your visa strategy, and/or making an application for an Australian Entrepreneur visa we will be delighted to hear from you. A free initial discussion is available.
