Private ruling: Early-stage innovation company eligibility
Date of advice: 12 December 2025
Published: 2 February 2026
Ruling period: DD MM YYYY to DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Does the Company meet the criteria of an early stage innovation company (ESIC) under subsection 360-40(1) of the Income Tax Assessment Act 1997 for the period DD MM YYYY to DD MM YYYY? | A1: Yes.

Relevant facts and circumstances: Background Facts 1. The Company is an Australian proprietary limited company incorporated on DD MM YYYY and registered in the Australian Business Register on DD MM YYYY. 2. The Company's business address is in a state or territory in Australia. 3. The Company does not have any wholly or partly owned subsidiaries and is not part of an income tax consolidated group. 4. The Company did not incur any expenses or receive any income in the income year ended DD MM YYYY. 5. The Company's shares are not listed for quotation on any stock exchange in Australia or a foreign country. 6. The Company issued new ordinary shares to investors in the income year ended DD MM YYYY. Product Development 7. The Company is developing a platform to address an identified need in a particular market. 8. The platform is novel to the Australian market and provides significant improvement to platforms operating overseas. 9. The Company explained the key innovative aspects of the platform. 10. The Company detailed how its product innovation provides a significantly improved service to target customers, a new delivery process and a new organisational method. 11. The Company's innovation is beyond the idea stage and has launched on a pilot basis. 12. The Company expects the development and commercialisation of its innovation/product to be completed within the next X years. Commercialisation Strategy 13. The Company's activities are aimed at commercialising the platform to generate economic value to customers and shareholders as the product and technology are developed. 14. The Company detailed several examples that demonstrate that the Company is genuinely focused on developing its product for a commercial purpose including: • pilot testing has commenced, early customers engaged • executing its go-to-market plan to scale its customer base • the platform and business model have been designed for rapid expansion • commercial partnerships have been established. 15. The Company demonstrated that it is pursuing a clear business opportunity in the market and implementing its innovation to earn revenue and achieve growth. High Growth Potential 16. The Company demonstrated its potential to achieve high growth. 17. The Company addresses a significant gap in the particular Australian market, positioning it for rapid expansion. 18. The Company provided details of market research undertaken that supports the high growth potential available to the Company including in relation to the large addressable market, untapped extended market, high demand for such a product, the substantial revenue opportunity. 19. The Company detailed how its value proposition will spur growth in the broader market and how the Company can capture a significant market share. 20. The Company's financial trajectory demonstrates a scalable and disciplined path toward sustained value creation. 21. The Company's operating model exhibits strong scalability with profitability forecast to turn positive by 20XX, demonstrating increasing operating leverage. Scale up the business 22. The Company demonstrated that it has the potential to successfully scale up its business to accommodate its growth. 23. From both a technological and operational perspective, the Company has been built with scalability in mind. The Company detailed enablers including: • the platform is built on modern, cloud-based microservices architecture • emphasis on automation • application programming interface (API) - first approach allows for an efficient and fast rollout. 24. Through the above factors, and others not listed, the Company demonstrated that it has the systems and strategies to support a much larger operation than its current size. 25. The Company provided its forecasted increase in customer numbers, significant increase in gross profit and early-stage losses from 20XX to 20XX. Operating expenses are forecast to grow throughout this period yet remain tightly controlled relative to revenue growth. Net profitability is forecast to turn positive by 20XX. Broader than Local Market 26. The Company detailed how its business model is inherently designed to transcend local market limitations, with clear capacity to address broader national and international markets, including: • the platform is designed to serve target customers across all Australian states and territories. The Company's operations are not confined to any single city or state and instead are structured to provide services nationwide • the platform is cloud-based and accessible online, allowing customers from any location in Australia to engage with its services without the need for physical branches • the platform's API-first approach enables adaptability to different regional requirements • strong potential for international expansion • the Company's innovative approach positions it well to meet similar demands in target overseas countries • strategic partnerships will enable the Company to offer its services globally. Competitive Advantages 27. The Company demonstrated that it has distinct and sustainable competitive advantages in its business arising from its unique blend of technology, product offering, and market strategy. The Company provided further detail of the following attributes that will allow the Company to outperform competitors: • the unique proprietary technology gives the Company a first-mover advantage in delivering a faster, more customised and efficient service • AI-Driven insights • the platform's functionality, features and offerings are unique and difficult to replicate. This broadens its competitive moat, as replicating the necessary frameworks and technology would pose a barrier to new entrants. • by leveraging technology, the Company offers superior customer experience. The Company's early adopters have been drawn by the platform's convenience and responsiveness. Over time, improved customer experience advantages will solidify brand loyalty and referral business, further strengthening the Company's competitive position • the Company is the pioneer in its market segment in Australia, allowing it to build brand recognition as the specialist in the innovative service. Intellectual Property 28. The Company is developing its own Intellectual property (IP) and owns the rights to all IP associated with its innovation/product. 29. The Company provided details of IP protection registered with IP Australia. 30. The Company will have clients sign a non-disclosure agreement where necessary and will include confidentiality clauses in legal agreements with customers. Information provided: 1. The Company provided the following documents containing detailed information in relation to its product including: • Private ruling application dated DD MM YYYY • Various company documents 2. We referred to the information within these documents in applying the relevant tests to the Company's circumstances.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 subsection 360-40(1) | Income Tax Assessment Act 1997 paragraph 360-40(1)(e)