Private ruling: Early stage innovation company eligibility
Date of advice: 6 March 2026
Published: 28 April 2026
Ruling period: DD MM YYYY | DD MM YYYY | DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Does the Company satisfy the criteria of an Early Stage Innovation Company pursuant to subsection 360-40(1) of the Income Tax Assessment Act 1997 ? | A1: Yes

Relevant facts and circumstances: All legislative references are to the Income Tax Assessment Act 1997 unless otherwise indicated. The Company is an Australian company incorporated on DD MM YYYY. It has no ultimate holding company and no subsidiaries. The Company is not listed on any stock exchange in the YYYY income year and is not a foreign company (within the meaning of the Corporations Act 2001 ). The test times for determining whether the Company is an Early Stage Innovation Company (ESIC) comprise all times in the YYYY income year. The Company developed a solution. It is an integrated system involving the provision of four services. Early Stage Test The Company meets the requirements of paragraph 360-40(1)(a) to paragraph 360-40(1)(d) and paragraph 360-40(1)(f), to be an ESIC because the Company: • was incorporated in Australia within the last 3 income years; • has not had more than $1 million of total expenses or more than $200,000 of total assessable income in any of its earlier income years; • has not had its equity interest 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 . Principles Based Test To be an ESIC the Company must also satisfy the principles based test under subparagraphs 360-40(1)(e)(i) to (v) or satisfy the 100 point innovation test in section 360-45. We have only considered the principles based test under which a company must meet five requirements. We have decided the Company meets these five requirements and so qualifies under the principles based test. Product Development and Development Stages The requirement under subparagraph 360-40(1)(e)(i) provides that the company must be genuinely focused on developing for commercialisation one or more new, or significantly improved, products, processes, services or marketing or organisational methods. The Company is genuinely focused on developing new products and services that enable existing infrastructure to be used to improve environmental outcomes. The Company is strategically commercialising by growing its network of international partnerships. The Company collaborates to scale the solution globally and are also in discussions internationally. High Growth Potential The requirement under subparagraph 360-40(1)(e)(ii) provides that the business relating to the products, processes, services or methods has a high growth potential. The Company has high growth potential because the Company's solution makes sustainability a cost-saving tool by reducing downtime during inspections, accelerating approvals and monitoring. They have a broad market and have high growth potential. The Company's early traction forms the launchpad for broader geographic expansion. There is high growth potential for the Company. Scale up the Business The requirement under subparagraph 360-40(1)(e)(iii) provides that the company can demonstrate that it has the potential to be able to successfully scale that business. The solution services are developed and focused on scalability as well as each product. The Company has the potential to scale up its business because the solution is a cost saving tool, reducing downtime and maintenance. Broader than the Local Market The requirement under subparagraph 360-40(1)(e)(iv) provides that the company can demonstrate it has the potential to be able to address a broader than local market, including global markets, through that business. The Company are in discussions with regulators and collaborators to expand their services internationally. Additionally, the Company has submitted a grant application for work and is in negotiation. The Company has potential to service a broader than local market and to adapt its business to access global markets. Competitive Advantages The requirement under subparagraph 360-40(1)(e)(v) provides that the company can demonstrate that it has the potential to be able to have competitive advantages for that business. The competitive advantages that the Company has is its expertise and the technology developed. The Company has demonstrated it has the potential to have competitive advantages for its business. Conclusion The Company meets the eligibility criteria of an ESIC under section 360-40 at all times during the income years ending DD MM YYYY to DD MM YYYY. Assumption The relevant facts and circumstances described in this ruling will continue unchanged for the income years ending DD MM YYYY and DD MM YYYY. 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 360-15 | Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 section 360-45