Private ruling: Early-stage innovation company
Date of advice: 1 April 2026
Published: 15 June 2026
Ruling period: Year ending XX XX XXXX | Year ending XX XX XXXX | Year ending XX XX XXXX | Year ending XX XX XXXX

Ruling: Q1: Will the Company satisfy the early-stage test (i.e. the requirements of paragraphs 360-40(1)(a) to (d) and (f) of the Income Tax Assessment Act 1997) ? | A1: Yes. | Q2: Will the Company satisfy the principles-based innovation test (i.e. the requirements of subparagraphs 360-40(1)(e)(i) to (v) of the Income Tax Assessment Act 1997 )? | A2: Yes.

Relevant facts and circumstances: 1. The Company was incorporated in Australia on XX XX XXXX. 2. The Company does not have any parent or subsidiary entities. 3. None of the Company's equity interests are listed for quotation on the official list of any stock exchange in Australia or a foreign country. 4. The Company is not a foreign company within the meaning of the Corporations Act 2001 . 5. The Company is at an early stage of development and is pre-revenue. 6. To date, the Company's total expenses are below $XXXX and its assessable income is below $XXXX. 7. The Company is developing a XXXX, which represents a material advancement over traditional tools by integrating XXXX. 8. The platform comprises four identified components which together form the core of the Company's innovation and are intended to operate as XXXX. 9. Development activities to date include XXXX. Assumptions • The Company will not incur more than $XXXX in total expenses across the XXXX income years. • The Company will not have more than $1 million of total expenses or more than $XXXX of total assessable income in any of the XXXX income years. • The relevant facts and circumstances described in this ruling will remain unchanged for the income years to which this ruling applies. If those facts or circumstances change, then this ruling will not apply.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 360-A | Income Tax Assessment Act 1997 section 360-40

Reasons for decision: Summary: Yes. The Company satisfies the early-stage test because it meets the requirements of paragraphs 360-40(1)(a) to (d) and (f). | Detailed Reasoning - Detailed reasoning: 10. For the income years ending XXXX, the Company satisfies the early stage requirements in paragraphs 360-40(1)(a) to (d) and (f) because it: • will have been incorporated in Australia within the last 3 income years; • will not have had more than $XXX of total expenses or more than $XXX of total assessable income in the income years ending XXXX; • will not have had its equity interests listed for quotation in the official list of any stock exchange, either in Australia or a foreign country; and • is not a foreign company within the meaning of the Corporations Act 2001 . 11. For the income year ending XXXX, the Company satisfies the early stage requirements in paragraphs 360 40(1)(a) to (d) and (f) because it: • will have been incorporated in Australia within the last X income years, and across the income years ending XXXX, it will not have incurred more than $XXX in total expenses; • will not have had more than $XXX of total assessable income in the income year ending XXXX; • will not have had its equity interests listed for quotation in the official list of any stock exchange, either in Australia or a foreign country; and • is not a foreign company within the meaning of the Corporations Act 2001 . | Detailed Reasoning - Question 2: Will the Company satisfy the principles-based innovation test (i.e. the requirements of subparagraphs 360-40(1)(e)(i) to (v))? | Summary: Yes. The Company satisfies the principles-based innovation test because it meets the requirements of subparagraphs 360-40(1)(e)(i) to (v). | Detailed Reasoning - Principles Based Test: 12. To be an ESIC, the Company must also satisfy paragraph 360-40(1)(e), which is satisfied if the Company meets the criteria in subparagraphs 360-40(1)(e)(i) to (v). Alternatively, the Company may satisfy the 100-point test in section 360-45. | Detailed Reasoning - Product Development and Development Stages: 13. Subparagraph 360-40(1)(e)(i) provides that the Company must be genuinely focused on developing, for commercial use, a new or significantly improved product, process, service or method. 14. This requirement is satisfied because the Company is developing XXXX. | Detailed Reasoning - Commercialisation Strategy: 15. Subparagraph 360-40(1)(e)(i) provides that development must be directed toward commercialisation. 16. This requirement is satisfied because the Company is progressing the XXXX solution toward commercial release and plans to deploy it nationally as an initial step. The design allows for the solution to be adjusted for use in other jurisdictions as the business grows, supporting its transition from development to active market use. | Detailed Reasoning - High Growth Potential: 17. Subparagraph 360-40(1)(e)(ii) provides that the business relating to the innovation must have high growth potential. 18. This requirement is satisfied because the solution includes functionality for contractors, developers and other XXXX participants and will be delivered through a XXXX. These features indicate that the solution is not limited to a single project or customer and is capable of broader uptake. | Detailed Reasoning - Scale up the Business: 19. Subparagraph 360-40(1)(e)(iii) provides that the business must be capable of scaling. 20. This requirement is satisfied because the Company's platform architecture allows more users to be supported without matching increases in operating costs in the XXXX sector. This shows the business can grow its operations without costs rising at the same rate. | Detailed Reasoning - Broader than the Local Market: 21. Subparagraph 360-40(1)(e)(iv) provides that the business must be capable of addressing more than a local market. 22. This requirement is satisfied because the solution is designed for Australia-wide use and can be configured for other jurisdictions as the business expands, showing it can serve customers beyond a single city or region and can be adapted to wider markets over time. | Detailed Reasoning - Competitive Advantages: 23. Subparagraph 360-40(1)(e)(v) provides that the business must have potential competitive advantages. 24. This requirement is satisfied because the solution brings together XXXX into a single system. This integration may reduce the need for users to rely on multiple separate tools and indicates a potential efficiency and workflow advantage compared to using standalone products. | Detailed Reasoning - Conclusion: 25. The Company satisfies subparagraphs 360-40(1)(e)(i) to (v). It is not necessary to consider the 100-point test in section 360-45.

Reasons for decision: All legislative references are to the Income Tax Assessment Act 1997 .