Private ruling: Early stage innovation company eligibility
Date of advice: 27 June 2024
Published: 12 August 2024
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 ('ITAA 1997') for the period DD MM YYYY to DD MM YYYY? | A1: Yes.

Relevant facts and circumstances: Background Facts The Company is an Australian proprietary company incorporated in Australia on DD MM YYYY. The Company is not part of an income tax consolidated group and is a single company with no subsidiaries. The Company's Directors are Person A, Person B and Person C. The Company's registered office and principal place of business is situated at XXX. For the financial year ending DD MM YYYY, The Company incurred and earned the following: • Total expenses of AUD$XXX. • Total income of AUD$XXX. The Company's equity interests are not listed for quotation in the official list of any stock exchange, either in Australia or foreign country. The Company is developing its own Intellectual Property. The Company issued ordinary shares in the Company on MM YYYY and DD MM YYYY to assist in funding the continued development and commercialisation of their software system. Product Development The Company has built a software solution for the XXX market. It is a software system that enables the mitigation of discrepancies and human errors. The software system is intended to reduce time and cost for its current and future customers. Commercialisation Strategy The Company is solely focused on commercialising its novel and innovative software. The Company is in the early phases of raising capital and is conducting supporting activities to bring its software solution to market. The Company is genuinely focused on commercialisation. The Company's development and commercialisation team are fully committed to the translation of its software solution into reality and have established a business structure and plan to do so. The Company holds a Partner Agreement with Company A and a Referral and Partnership Agreement with Company B. High Growth Potential The value proposition of the Company's software solution addresses a local and international readily addressable market opportunity based on research conducted by The Company. The Company's market during the first several years of commercial operation is likely to include those regions/countries that have regulatory frameworks that are defined as easy to navigate. Scale up the business. The Company's business model is scalable and is based upon the building on the innovation and commercial success previously achieved. Prior to entering global markets, development work needs to be undertaken to meet regulatory requirements, identify and substantiate product claims and then, gain product acceptance in the market as a solution to the market's problems and aspirations. Broader than Local Market The Company has identified that the local and global markets are large. The opportunity to provide a software solution in both markets appears to be significant. Product differentiation could possibly lead to global market share through sustainable competitive advantage. Competitive Advantages The Company is an Australian Company that will be creating Australian jobs and software powered by Australian innovation, and accordingly eligible for certain grant funding and co-funded opportunities. The Company owns all improvements made to The Company intellectual property. The Company is confident that being the first business to develop its software solution, it will have significant potential value in the market. Information provided: You have provided a number of documents containing detailed information in relation to The Company's product, including: Private Binding Ruling ('PBR') Application dated DD MM YYYY. Various documents. We have referred to the relevant information within these documents in applying the relevant tests to your circumstances.

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