Private ruling: Early stage innovation company
Date of advice: 16 April 2026
Published: 20 July 2026
Ruling period: 1 July 20XX to 30 June 20XX

Ruling: Q1: Does Company A qualify as an ESIC? | A1: Yes.

Relevant facts and circumstances: 1. Company A was registered with ASIC during the 20XX income year. 2. Company A had no subsidiaries during the 20XX income year. 3. None of Company A's shares were listed on a stock exchange during the 20XX income year. 4. Company A submits it has developed a product with features that competing products in the relevant market don't yet have. (We've removed the details in this EV for confidentiality reasons). 5. Company A supported its application with documents that described its product and plans to commercialise it. We include these supporting documents (and their contents) in the facts and circumstances of this private ruling.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 360-40

Reasons for decision: Summary: Does Company A qualify as an ESIC? Yes. | Detailed Reasoning - Explanation: 6. Subsection 360-40(1) lists the conditions to qualify as an ESIC. We list and apply them to Company A in Tables 1 and 2. Company A meets these conditions for the reasons given in those tables. | Detailed Reasoning - Applied to Company A: Paragraph (a): the company must meet any of three tests about incorporation or business registration in paragraph (a). One of those tests is that the company was incorporated in Australia within the last 3 income years (the latest being the current year). Met. Company A was incorporated in the 20XX income year, which is the 'current year' for this ruling. Paragraph (b): the company and its 100% subsidiaries incurred total expenses of $1 million or less in the income year before the current year. Met. Company A didn't have any expenses in the previous income year, because it didn't exist (it was incorporated in the current income year). Paragraph (c): the company and its 100% subsidiaries had a total assessable income of $200,000 or less in the income year before the current year. Met. Company A didn't have any income in the previous income year, because it didn't exist (it was incorporated in the current income year). Paragraph (d): at the test time, none of the company's equity interests are listed for quotation in the official list of any stock exchange in Australia or a foreign country. Met. Company A didn't have any equity interests listed on a stock exchange during the ruling period. Paragraph (e): the company either has a 100 points under section 360-45, or meets the principles-based test. Met. We're satisfied Company A meets the principles-based test. See Table 2. Paragraph (f): at the test time, the company isn't a foreign company (within the meaning of the Corporations Act 2001 ). Met. Company A isn't a foreign company because it's incorporated in Australia. 7. We apply the principles-based test to Company A in Table 2. Having reviewed the application and supporting documents, we're satisfied that Company A passes the principles-based test. | Detailed Reasoning - Applied to Company A (during the 20XX income year): (i) the company is genuinely focussed on developing for commercialisation one or more new (or significantly improved) products, processes, services, or (marketing or organisational) methods Met. We accept that Company A was genuinely focussed on developing a product, and that product was 'new' for the relevant market at the time (20XX income year). (ii) the business relating to those products, processes, services or methods has a high growth potential Met. We accept that Company A's product had the potential to grow throughout the relevant market, because the product is new for that market and offers competitive advantages. (iii) the company can demonstrate that it has the potential to be able to successfully scale that business Met. We accept that Company A's business had the potential to achieve economies of scale (that would allow it to reduce costs per-unit as it expands). (iv) the company can demonstrate that it has the potential to be able to address a broader than local market, including global markets, through that business Met. We accept that Company A's business had the potential to address the relevant market both Australia-wide and overseas. (v) the company can demonstrate that it has the potential to be able to have competitive advantages for that business Met. We accept that Company A's products had the potential to have competitive advantages over competing products. 8. Since Company A meets the conditions in subsection 360-40(1), including the principles-based test, it qualifies as an ESIC for the ruling period.

Subject: Early stage innovation company: In this ruling and reasons for decision: | • section 360-40 means section 360-40 of the Income Tax Assessment Act 1997 | • 'ESIC' means a company to which subsection 360-40(1) applies | • 'principles-based test' means the conditions listed in subparagraphs 360-40(1)(e)(i) through (v).