Private ruling: Early-stage innovation company
Date of advice: 25 May 2026
Published: 10 August 2026
Ruling period: For the income year ended 30 June 20YY | For the income year ended 30 June 20YY

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 ('ITAA 1997') for the income years ended 30 June 20XX and 30 June 20YY? | A1: Yes.

Relevant facts and circumstances: Early Stage Test The Company is a company limited by shares which was incorporated in Australia sometime in 20XX. For the income year prior to incorporation, the Company incurred no expenditure and derived no income. Further, the Company incurred no expenditure and derived no income during the income year ended 30 June 20XX. 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. Background Facts The Company has no wholly or partly owned subsidiaries. The Company is not part of an income tax consolidated group. The Company has a sole director. Its principal place of business is situated in Australia. The Company is not a foreign company within the meaning of the Corporations Act 2001 (Cth). The 'test time' for determining if the Company is a qualifying ESIC, will be upon the issue of qualifying shares on a particular date or dates on or after the Company's incorporation, and on or before 30 June 20YY. Product Development The Company is developing a medical device ('the Device') which will be used in certain medical procedures. The Device will be different from other comparable devices which are available on the market. In this regard, the applicant has highlighted the design differences between the Device and other devices, and the Device's advantages. Intellectual P roperty The Company is the legal and beneficial owner of the intellectual property (IP) in the Device. The IP was assigned to the Company sometime in 20XX by the founding shareholder. The Company has acquired international IP rights for the Device. Product Development Stages The development of the Device is still in the research and development phase. The Company has undertaken certain activities directed towards development of the Device. To fully develop the Device further development activities will be undertaken. Commercialisation Strategy The Company plans to initiate sales in certain clinical centres and hospitals in an overseas country, Country X leading to a generation of revenue. The Company will use reputed distributors, which are supported by their clinical experts. The Company also intends to seek relevant approvals with the TGA in Australia and with the X Union' regulators, following Country X regulatory clearance. Based on the above, the Company is clearly focussed on developing the Device for a commercial purpose. The Device is an innovation and consequently subparagraph 360-40(1)(e)(i) is satisfied. High Growth Potential The Company's Device addresses a global healthcare need as there is an increasing demand for this type of procedure. As there is a growing clinical need for this type of technology as mentioned above, the value of the market is growing. The Company's market has estimated that the total addressable market for the Device is $XXXX. The Company has demonstrated that it has high growth potential satisfying the requirement under subparagraph 360-40(1)(ii). Scale up the Business The Company intends to launch in Country X and later into Australia and the X Union, subject to the relevant regulatory approvals being granted. As the Company is supported by a team with international and commercial experience the Company is well-equipped to accelerate the adoption of the Device. Given the combination of the Company's commercialization strategy, team experience, the technology developed and the value of the global market, it is considered the Company is positioned to scale up its business successfully. Broader than Local Market The Company intends to initially access Country X market, and once regulatory clearance is obtained seek regulatory approval for the Device in other countries. Thus, the Company's addressable market is on a global scale and is not confined to a local city, area or region. The Company has demonstrated that it has the potential to be able to serve a market that is broader than a local city, area or region or country, thereby satisfying subparagraph 360-40(1)(e)(iv). Competitive Advantages The Device has features which in combination give it a competitive advantage over other devices on the market in undertaking certain medical procedures. Accordingly, it is considered that Company has demonstrated the potential for the Device to have competitive advantages over other embolization devices, thereby satisfying subparagraph 360-40(1)(e)(v).

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 360-A | Income Tax Assessment Act 1997 section 360-15 | Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 section 360-45