Private ruling: Early-stage innovation company eligibility
Date of advice: 4 March 2026
Published: 20 April 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. Person X is a director of the Company. 3. The Company's registered office and principal place of business is situated in a state or territory in Australia. 4. The Company has no wholly or partly owned subsidiaries and is not part of an income tax consolidated group. 5. For the income year ended 30 June 20XX, the Company incurred less than $1 million expenditure and had less than $x00,000 assessable income. 6. 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. 7. The Company will issue new ordinary shares to eligible investors in the financial year ending 30 June 20XX. Product Development 8. The Company is developing a new product to meet an unmet growing need in the particular market. 9. The Company described the product's key innovations. 10. The Company has achieved significant early traction. 11. The Company detailed its key development milestones completed, in-progress and projected, along with a timeline for the milestones. 12. The Company provided details of validation it has received from industry, academic and innovation communities. Commercialisation 13. The Company is genuinely focussed on developing its product for commercialisation. 14. The Company has assembled a team with complementary experience in commercialisation, innovation and technology and provided a summary of key team member's background and expertise. 15. The Company's phased commercialisation strategy includes product trials, securing regulatory approvals, entering the Australia market and entering the overseas market. 16. The Company is engaging with manufacturers. 17. The Company's financial projections support the company's commitment to progressing its innovations from development phase to commercialisation and to generating profit for the Company. High Growth Potential 18. The Company's business relating to its innovation has high growth potential. 19. The Company provided details of the size of the global market and how it is trending. 20. The Company demonstrated its potential to meet the demand in the market and generate increased revenue from its product. 21. The Company provided evidence of interest in its product and development of strategic relationships. Scale up the business 22. The Company is well positioned to scale successfully to fill its high growth potential through a phased approach. 23. The Company provided details of anticipated cost and time savings in relation to supply chains and manufacturing. 24. The Company's financial projection displays sustained profitability and significant increase in revenue with minimal increase in operating costs relative to the revenue. 25. The Company will leverage its team of innovation scale-up professionals to scale the business. 26. The Company's innovative technology creates possibilities for other applications. Broader than Local Market 27. There is a global need for the Company's innovation, and the Company has the potential and intention to address the global market as well as the Australian market. The market the Company will serve is therefore not confined to a local city, area, region, or country. 28. The Company detailed it's global and national expansion plan. Competitive Advantages 29. The Company's team identified that innovation is needed to meet market trends relating to the particular technologies. 30. The Company listed limitations of existing solutions it has identified. 31. The Company detailed its competitive advantages relating to their innovation including: • first mover advantage • the team's complimentary expertise and experience • validation from industry, academic and innovation communities • established collaborative partnerships. Intellectual Property 32. The Company owns the intellectual property (IP) it is developing. 33. The Company has protected its IP through patents and maintains trade secrets, proprietary test results and confidential design methods. 34. Any services provided by others will be under formal agreements that assign any newly developed IP to the Company, ensuring the Company retains exclusive rights to its core technology, data, and future commercial applications. Information provided 35. The Company provided various documents containing detailed information in relation to its product including: • Private ruling application dated DD MM YYYY. • Pitch deck, Financial Projections. 36. We have referred to the information within these documents and other documents provided 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)