Private ruling: Early-stage innovation company
Date of advice: 19 May 2026
Published: 10 August 2026
Ruling period: 1 July 20YY to 30 June 20YY

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

Relevant facts and circumstances: 1. Company A was incorporated in Australia during the 2026 income year. 2. Company A's shares weren't listed on a stock exchange (in Australia or elsewhere) during the 20YY income year. 3. Company A is developing a digital platform/database focussed on Industry B research. This digital platform allows researchers to upload papers and allows users to search and pay for Industry B related research. 4. Presently, no other digital platform or database exists that a) is focused on Industry B, b) allows researchers to upload and be paid for their work, and c) allows users to access Industry B specific databases using Method C. 5. Company A will earn income from both subscriptions and a share of the sale price for research papers. 6. Company A gave us supporting documents explaining the digital platform. We include the full contents of these documents in the facts and circumstances of this ruling. Assumption There will be no material changes to Company A's activities during the remainder of the 20YY income year.

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

Reasons for decision: Summary: 7. 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 Australia in the 2026 income year, which is the current year. 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 was incorporated in the current income year, so it didn't have any expenses in the previous 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 was incorporated in the current income year, so it didn't have any assessable income in the previous 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's shares aren't listed on a stock exchange. Paragraph (e): the company either has a 100 points under section 360-45, or meets the principles-based test. Met. 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 is incorporated in Australia and isn't a foreign company. 8. 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: (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. Company A is developing an Industry B database that allows people to buy research papers on these topics. This is a new product (for the Industry B research market) because no single platform/database compiles research on these topics. (ii) the business relating to those products, processes, services or methods has a high growth potential Met. We accept that Company A's Industry B database has high growth potential. (iii) the company can demonstrate that it has the potential to be able to successfully scale that business Met. Company A's business model is digital, so it will be able to increase revenue through sales and subscriptions without significant variable/per-unit costs. It will be able to increase its profit margin as its sales grow. (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 has the potential to address the Industry B research market worldwide. (v) the company can demonstrate that it has the potential to be able to have competitive advantages for that business Met. Company A has competitive advantages over alternatives because no single database compiles research on Industry B in a way that lets researchers sell to interested buyers, and allows buyers to search, locate, and pay for relevant Industry B research. 9. 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. 10. Note that this ruling depends on there being no changes to the facts and circumstances during the ruling period. The ruling won't apply if those facts and circumstances change.