Private ruling: Early-stage innovation company eligibility
Date of advice: 21 January 2026
Published: 16 March 2026
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 for the period DD MM YYYY to DD MM YYYY? | A1: Yes.

Relevant facts and circumstances: Background Facts 1. The Company is a proprietary company incorporated in Australia on DD MM YYYY. 2. The Company's director is Person X. 3. The Company's registered office and principal place of business is situated in a state or territory in Australia. 4. The Company has one subsidiary that is dormant and does not perform any activities or roles related to the Company's innovation, or earn any revenue or pay any expenses related to the innovation. 5. The Company is not part of an income tax consolidated group. 6. For the income year ended 30 June 20XX, the Company had less than $1 million in expenditure and had less than $200,000 assessable income. 7. The Company's equity interests are not listed for quotation in the official list of any stock exchange, either in Australia or a foreign country. 8. The Company will issue new ordinary shares to eligible investors in the 20XX financial year. Product Development and Commercialisation 9. The Company is developing a new product to meet a growing need in the particular market. 10. An efficient solution is not currently available to service the particular market. 11. The Company described the product's key innovations and detailed how it will fill the gap in the market and address inefficiencies. 12. The Company will develop and commercialise a main product and other products may eventuate. 13. The Company demonstrated that it is genuinely focused on developing its product for commercialisation. 14. The Company has assembled a team with complementary experience in commercialisation, innovation and technology. The Company provided details of the backgrounds of its key team members. 15. Development and commercialisation of the Company's product is progressing quickly. The Company advised of activities being undertaken in relation to developing and commercialising their product. 16. The Company expects to be in a position to launch in 20XX pending funding and achieving other milestones. 17. The Company's 'Roadmap' exhibits the Company's commercialisation strategy, outlining targets in relation to being fully developed and commercialised, revenue, profit and expansion. High Growth Potential 18. The Company detailed its potential for high growth within its Australian and global market, providing data regarding the size of the market and how it is trending. 19. The Company is uniquely positioned to commercialise the particular growing segment of the market. 20. A number of investors have expressed interest in the Company's product. Anticipated further strategic engagement will increase the Company's high growth potential. Scale up the business 21. The Company has the potential to successfully scale up its business as most of the company's upfront costs relate to technology development. 22. The Company's financial projections illustrate the Company's profitability and significant increase in revenue while incurring minimal increase in operating costs relative to the revenue. 23. The technological innovation provides sustainable, rapid growth efficiencies to the Company. 24. The Company outlined how it's product may create additional recurring revenue in future. 25. The Company has assembled a team of innovation scale-up professionals. 26. The Company provided details of how mitigation of identified risks will increase the Company's capability to scale its business. 27. The Company provided its roadmap to commercialisation and beyond and its targets, illustrating how effectively the Company will scale its operations. 28. An intended capital raise will contribute to the company's capability to scale up its business with fund allocation to team expansion and sales, operating expenses and marketing and brand awareness. 29. The Company has gained quick traction in the market. Broader than Local Market 30. The market for the Company's product is not confined to a local city, area or region. Initially, the Company will serve certain states in the Australian market, with the potential to serve a national market. 31. The Company's executive have met and corresponded with potential customers and partners from various Australian businesses that confirm demand for the Company's product. 32. The Company's product addresses a global need and has been identified as having an international addressable market. 33. Expansion to a number of countries is anticipated after the Company has adapted its product for a global market. Competitive Advantages 34. The product's innovative features and functionality in a new market provide the Company with competitive advantages for the business. 35. The Company's product is the first such product in Australia, giving the Company first mover advantage. 36. The Company has established a strong position in the market by building an early base of customers. 37. The Company provided detailed commentary on its competitive landscape. Intellectual Property 38. The Company owns the intellectual property (IP) it is developing. 39. The Company is building defensible proprietary IP in relation to the product and its potential future monetisation pathways. 40. Over time, the Company's proprietary infrastructure may also be licensed or white labelled to third party entities. Information provided 1. The Company provided the following documents containing detailed information in relation to its product: • Private ruling application dated DD MM YYYY. • Various documents including Financial Projection, Pitch Deck. 2. We have referred to the information within these documents in applying the relevant tests to the Company's circumstances.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 subsection 360-40(1) | Income Tax Assessment Act 1997 paragraph 360-40(1)(e)