Private ruling: Early-stage innovation company eligibility
Date of advice: 29 January 2026
Published: 23 March 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 a proprietary company incorporated in Australia on XX/XX/20XX. 2. The Company's co-founders and directors are Individual X and Individual Y. 3. The Company's registered office and principal place of business is situated in a state or territory in Australia. 4. The Company has no wholly or partly owned subsidiaries and is not part of an income tax consolidated group. 5. For the financial year ended 30 June 20XX, the Company incurred total expenses of less than $1 million and had total assessable income of less than $200,000. 6. 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. 7. The Company intends to issue new ordinary shares to eligible investors in the financial year ending 30 June 20XX. Product development 8. The Company is developing an innovative therapeutic product. 9. The product represents a substantial advancement in the detection of a particular medical condition. 10. The Company detailed the innovative features and functional characteristics of its product. 11. The Company explained the limitations of existing products and how its innovation eliminates product related barriers. Commercialisation 12. The Company demonstrated that it is genuinely focussed on developing its innovation for commercialisation. 13. The Company provided its staged roadmap to commercialisation. 14. The Company's key team members have successfully commercialised other healthcare innovations. High growth potential 15. The Company is strategically positioned to address the escalating healthcare challenge of a particular medical condition, with a global prevalence of the condition projected to rise significantly by 20XX. 16. The Company provided statistics from its market research. 17. A pilot of the Company's innovation is scheduled. The pilot will assess among other things, consumer useability and engagement. Findings will guide any refinements required. 18. In addition to a capital raise to facilitate commercial launch of the innovation, the Company will secure sponsorship from strategic partners and apply for relevant grants. 19. The Company's business plan is supported by the Company's operating model and frameworks in relation to pricing, distribution, marketing strategy, financial projections. 20. The Company's high growth potential is also demonstrated by the following: • clinical validation of the innovation • additional partners set to onboard at various stages • positive feedback from healthcare practitioners regarding high patient demand, workflow fit, innovative features, revenue potential • public health endorsement. Scale up the business 21. The Company demonstrated potential to successfully scale its business to fill its high growth potential. 22. In addition to the Company's key team members being the inventors of the innovation, they bring expertise in securing investment, regulatory development of innovations and commercialisation. 23. A manufacturer for the innovation has been secured. 24. The Company has definite plans to grow its operations in Australia and overseas over the next X years as reflected in its Go-to-market strategy. 25. The Company's financial projections illustrate the company's profitability and significant increase in revenue, while incurring minimal increase in operating costs relative to the revenue. Broader than local market 26. The Company's product addresses a global healthcare need. 27. The Company outlined the target market customers for its product in Australia and overseas. 28. The Company outlined its export strategy. 29. The Company 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. Competitive advantages 30. The Company has first-mover advantage. 31. The Company described differentiating features of its product. 32. The Company provided detailed competitive analysis including identification of competitors, evaluation of their products, their strength and weaknesses and market positioning. Intellectual property 33. The Company owns 100% of the Intellectual property (IP) relating to the product. 34. The Company has taken appropriate action to protect the IP including registrations with IP Australia. Information provided: 1. The Company provided documents containing detailed information in relation to its product including: • Private ruling application dated DD MM YYYY • Financial statements, revenue and expenses forecast, competitor analysis. 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)