Private ruling: Early-stage innovation company eligibility
Date of advice: 1 May 2026
Published: 20 July 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 The Company is a proprietary company incorporated in Australia on DD MM YYYY. The Company provided the names and roles of its founding team. The Company's registered office and principal place of business is situated in a state or territory in Australia. The Company does not have any subsidiaries and is not part of an income tax consolidated group. For the income year ended 30 June 20XX, the Company incurred less than $X expenditure and had less than $X assessable income. 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. The Company is actively seeking funds and will issue ordinary shares to eligible investors. Product Development The Company is developing a new product that will solve many operational problems faced in a particular industry. The Company described the product's key innovations and functionalities. The Company detailed tangible developments steps it has completed. The Company provided details of feedback on its proof of concept, confirming that a ready market exists for its product. Commercialisation The Company's business plan is centred on commercialising its product and demonstrates the Company's intention to generate economic value for the company from exploiting the innovation. The Company has undertaken substantial market research and competitor analysis and investigated eligibility for various grants. The Company has progressed its product well beyond pre-concept stage and is undertaking proof of concept activities. The Company has determined its assessable market and formulated its commercialisation strategy. The Company is seeking investment to facilitate commercialisation of its product. High Growth Potential The Company's business relating to its product has high growth potential. The Company provided the value of its total addressable market (TAM), its serviceable addressable market (SAM), and its serviceable obtainable market (SOM) from market research undertaken. The Company provided details of its strategy to exploit the market. In addition to the traditional markets for the Company's product, there are also ancillary revenue windows identified by the Company. The Company provided an estimate of the size of revenue from these potential markets. Scale up the business The Company is seeking to raise additional funds to enable scaling up of the business to meet the identified market potential. The Company intends to use investor funds consistent with the phases of its strategy and growth plan. The Company demonstrated scalability of its business model through its strategic marketing plan for the product. The Company has determined the most advantageous strategy for the business in relation to distribution of its product domestically and internationally. As part of the Company's strategy to exploit its product and scale up the business, it has created a release schedule. The Company plans to expand its workforce to enable it to scale up its business. The Company provided its revenue and expenses forecast for the next X years. The forecast revenue reflects a scaling up of the business and enhanced profitability as the Company's expertise becomes sought after. The forecast also illustrates the Company's capacity to multiply revenue materially while incurring a reduced or minimal increase in operating costs. The Company's business has the potential to increase its economic value through other revenue generating opportunities envisaged. Broader than Local Market The Company has the potential to serve a market that is broader than a local city, area or region and its business is capable of being adapted to supply a broader national and global market in the future. The Company's total serviceable market is global. Initially, the Company's focus is to supply the national domestic market. The Company plans to expand to supply the international market in future. The Company's longer-term strategy is to broaden the demand for its product globally. This is especially facilitated by the adaptable functionality of the product. Competitive Advantages The Company provided insight into the market trends impacting the particular industry and the opportunities the trends provide innovative companies, placing them at a competitive advantage. The Company described limitations of existing solutions. The Company detailed the attributes of its innovative product that support the Company's competitive position, demonstrating differential advantages. The Company advised of the main competitive risks it faces. The Company provided details of its competitor analysis in which it identified key competitor cohorts, named principal competitors in Australia and overseas, and noted the limitations of their solutions. The Company outlined its strategic approach to the competitive pressures described. Intellectual Property The Company owns the intellectual property (IP) associated with its product. The Company will take steps to secure its IP through patents. The Company advised of how it also protects its IP through various other measures. Information provided The Company provided various documents containing detailed information regarding its product including: • Private ruling application dated DD MM YYYY. • Investor presentation. 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)