Private ruling: Early-stage innovation company eligibility
Date of advice: 2 April 2026
Published: 15 June 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 The Company is a proprietary company incorporated in Australia and registered on the Australian Business Register on DD MM YYYY. The Company's directors include Person X and Person Y. The Company's registered office and principal place of business is situated in a state or territory in Australia. The company does not have any subsidiaries and is not part of an income tax consolidated group. The Company's equity interests are not listed for quotation in the official list of any stock exchange, either in Australia or a foreign country. For the income year ended 30 June 20XX, the Company had less than $1 million in expenditure and had less than $200,000 assessable income. The Company issued new shares to external eligible investors in the income year ended 30 June 20XX. Product Development The Company is developing an AI-driven platform (product) to be used in a particular industry for improving certain business operations. The Company provided details of the product's revolutionary functionalities and characteristics. The Company identified the intended users of its product. The Company will provide associated services in addition to its product. The Company's platform represents a significantly improved innovation product in the industry, and a service innovation for its addressable market. The Company detailed the experience and expertise of its team members. The Company explained what makes it perfectly positioned to disrupt the market and provide a revolutionary product to the Australian market and the global market. Commercialisation The Company detailed the steps it has been taking towards the commercialisation of its product and associated services including testing, trials and establishing partnerships. The Company provided its roadmap to full commercialisation. High Growth Potential The Company identified its addressable market and the expected growth sourced from published market research. The Company advised of market trends in the industry which provide opportunities for solutions with functionalities and capabilities such as those offered by the Company's product. The Company advised of the high demand in Australia and globally for its product and services and what is driving the demand. The Company's product has generated significant interest from early product demonstrations. The Company is both well positioned and projected for high growth due to the demand by stakeholders and the breadth of industry participants that the Company can provide solutions for. The Company also listed a number of other reasons it is well positioned to capitalise from the high growth in the industry and the software market including: • it has a high performing team with decades of both direct and indirect experience in the industry and building software • the team has deep industry connections which will assist it in obtaining a foothold in the market • the product is cutting edge, agile and can be adapted and used broadly • the product is AI augmented through its proprietary AI technology. Scale up the business The Company provided details of the revenue streams expected to generate revenue for the business. Opportunities for innovation in the industry signal the Company's potential for scalability. The Company's business plan provides for expansion of their capabilities, from which additional revenue streams can be achieved. The Company is capable of being highly reflexive to demand and rapidly expanding its business and therefore has operating leverage and the potential to successfully scale its business to supply broad markets. Providing software-as-a-service gives the Company recurring revenue necessary to constantly iterate and improve its product as it deploys to the market through organic expansion as well as through strategic partnerships. The product is a cloud-based platform allowing for high growth of its user base without being bottlenecked at the infrastructure level and therefore incurring minimal marginal costs while dramatically increasing its revenue. The Company forecast its Compound Annual Growth Rate (CAGR) from sales, its initial customer base and growth in customer numbers. The high growth projected by the Company is underpinned by sustainable operating costs. The Company will be well capitalised to grow and compete globally. The Company also forecasted its increase in staff numbers over the next X years. The Company provided its projected revenue and expenses for the next X years. The Company will leverage the experience of its leadership team to scale up its business. Broader than Local Market The Company is capable of supplying a broader than local market. The Company can service businesses and key stakeholders, initially within the industry in Australia, and ultimately on a global scale. The product's cloud-based delivery model makes it inherently suitable for global deployment as it is not constrained by geographical boundaries. The Company is exploring potential partnerships, including with distributors. The Company provided expected timeframes for its domestic and international expansion. The deep industry connections of the team will contribute to the Company's ability to adapt its business to supply national and global markets. The Company is capable of being highly reflexive to demand and rapidly expanding its business to supply broad markets. The Company's plan to increase its headcount significantly by 20XX further demonstrates the Company's capability of supplying to broad markets. Competitive Advantages The Company fills a gap within the industry, giving it a clear potential for competitive advantage. The Company named their key competitors and explained why their competitor's products present a wide variety of challenges for end users, including: • difficult usability • inflexible pricing • inability to incorporate AI functionality, and • difficultly integrating with third-party data platforms and external systems. The Company detailed how it is aiming to address these issues in its product. By identifying existing issues with products currently on the market and building a solution that directly addresses concerns of users, the Company has provided a strong value proposition to potential customers for its product and associated services in the domestic and global markets. Intellectual Property The Company owns all intellectual property (IP) associated with its innovations. The Company is safeguarding its IP through patents, protecting their brand through registered trademarks and implementing clear licensing frameworks. Information provided The Company provided documents containing detailed information in relation to its product including: • Private ruling application dated DD MM YYYY. • Business Plan, Pitch Deck, Roadmap to Commercialisation, Revenue and Expenses forecast. • Response to our Request for Information received on DD MM YYYY. We have referred to the information within these documents and other documents provided 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)