Private ruling: Eligible accelerator program
Date of advice: 27 August 2025
Published: 27 October 2025
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: XX/XX/20XX

Ruling: Q1: Does the Program delivered by Entity A meet the requirements of an eligible accelerator program for the purposes of item 4 of the table in subsection 360-45(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: 1. As part of its operations the Entity offers a suite of programs to support innovators and their start-up companies. One of these programs is the Program. 2. The entity has been offering the Program since 20XX and details of the Program including selection process, structure and curriculum was provided with the ruling application.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 360-A | Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 section 360-45

Reasons for decision: Summary: 3. In determining whether a company is an early-stage innovation company (ESIC) under paragraph 360-40(1), the company must have at least 100 points under section 360-45 or meets the requirements set down in subparagraphs 360-40(1)(i) to (v). 4. In respect of the 100 points, 50 points are available under Item 4 if a company has: a) completed or is undertaking an accelerator program that: i. provides time-limited support for entrepreneurs with start-up businesses; and ii. is provided to entrepreneurs that are selected in an open, independent and competitive manner; and b) the entity providing that program has been providing that, or other accelerator programs for entrepreneurs, for at least 6 months; and c) such programs have been completed by at least one cohort of entrepreneurs. 5. Paragraph 1.95 of the Explanatory Memorandum (EM) to Tax Laws Amendment (Tax Incentives For Innovation) Bill 2016 provides guidance on the above item and refers to accelerator programs that satisfy Item 4 as an eligible accelerator programme: An eligible accelerator programme is a programme that provides time-limited support for start-ups, for which an open, independent and competitive application process is required for entry, provided the entity running that programme has been operating for at least a six-month period and has provided a complete programme of this kind to at least one cohort of entrepreneurs. Accelerator programmes that cannot provide value adding support (mentorship, training, education and networks) to the accepted companies or have had no successful companies coming through the programme are unlikely to be effective accelerator programmes. 6. In these reasons we will use the term eligible accelerator program [1] to describe a program that satisfies Item 4, but it is not sufficient for a program to satisfy the generally accepted meaning of what is an accelerator program. In order for start-ups that undertake the program to be eligible for 50 points, the program must meet the specific requirements listed in Item 4. | Detailed Reasoning - Accelerator program - generally accepted meaning: 7. Accelerator programs have been identified as generally having 5 defining, partially-interdependent features, being: seed funding; cohort based; co-location; a structured program; and mentoring. [2] 8. It is not essential for an entity to precisely meet all 5 criteria in order to be considered an accelerator. The criteria are intended as a guide only. Consideration will involve a weighing of the factors on a case by case basis. | Detailed Reasoning - Seed funding: 9. Accelerators typically offer start-ups seed funding in exchange for a small proportion of equity. This is generally around 7.5% to 10% for a $xx,000 to $xx,000 cash investment, in addition to further in-kind value worth $xx,000 to $xx,000. 10. Entity A provides seed funding but does not take any equity in the entities accepted into the Program. [1] For consistency, although the quoted paragraph of the EM uses the word programme, we have used the word program in the rest of this ruling as that is the spelling used in Item 4 [2] The role and performance of accelerators in the Australian startup ecosystem - final report for the Department of Industry, Innovation & Science; UNSW Australia Business School, Feb 2016.