Private ruling: Early stage innovation company eligibility
Date of advice: 22 July 2025
Published: 22 September 2025
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 was incorporated by the Australian Securities & Investment Commission (ASIC) and registered in the Australian Business Register (ABR) on DD MM YYYY. The Company does not have any 100% owned subsidiaries and is not part of an income tax consolidated group. The Company's Directors are Person X and Person Y. The Company's principal place of business is situated in a state or territory in Australia. The Company's equity interests are not listed for quotation on the Australian or any other stock exchange. Total expenses incurred by Company for the financial year ended 30 June 20XX was less than $1 million. The Company's total assessable income for the financial year ended 30 June 20XX was $200,000 or less. The Company intends to issue ordinary class shares to investors in the current financial year. Product Development The Company is developing an innovative product to address particular inefficiencies and gaps in the assessable market. The Company detailed features of the product that make it a significantly improved and significantly advanced product. The Company provided details of the work undertaken so far to develop its product. The Company provided details of the future steps required to be completed before the product is fully developed and a timeline associated with the steps. Commercialisation Strategy The Company expects to complete commercialisation of their product in 20XX. The Company's Commercialisation Strategy details the phased pathway to commercialising their product. The Company will go-to-market in stages: launching in Australia via strategic pilots, expanding overseas to specific countries then expanding globally. The Company has determined its pricing strategy and forecast the economic value for the company generated by commercialisation of the product. The Company is seeking investors to support their development and commercialisation activities. High Growth Potential The Company's business relating to their product has high growth potential as the Company has the ability to generate larger revenue, expand its workforce, increase production and broaden its market in the future. The global demand for the technology is high and forecast to grow significantly. The Company detailed how it is uniquely positioned to lead and grow to meet this demand. The Company's founding team have deep field and commercial experience and will drive growth. The Company is actively onboarding senior sales talent to accelerate business-to-business (B2B) adoption. Manufacturing its product gives the Company a competitive edge, stronger supply chains, and access to financial incentives. With full manufacturing control, the Company can expand into new industries, access downstream distribution and unlock new strategic revenue through resource sales. The Company cited market research findings relevant to their product. The Company detailed enablers to it generating larger revenue over time from the product. The Company's financial forecast for the next X financial years shows the increase in revenue for the company generated by the product. Scale up the business The Company has the potential to successfully scale its business to fill its high growth potential. The Company's founding team has deep operational and technical experience. Their collective backgrounds provide direct access to pilot customers, domain expertise, and an innovation-led culture. The Company is expanding its development and operations teams as funding progresses. The Company's manufacturing and intellectual property (IP) ownership unlock operational efficiency through automation, lean practices, and reduced reliance on external partners. Owning the IP enables faster innovation, protects the Company's first-mover edge, and supports smarter investment decisions thereby boosting profitability and long term value. By owning its manufacturing process, the Company captures end to-end profit margins and strengthens supply control chain, positioning the Company for stable earnings through diversified and predictable revenue, even in volatile markets. The Company's financial forecasts shows revenue multiplying while incurring minimal increase in operating costs. Broader than Local Market The Company has the potential and intention to serve a market that is broader than a local city, area or region. The Company's go-to-market plan includes first launching to particular markets throughout Australia, then to those markets in targeted countries, and expanding to various markets globally. The Company's product has global competitiveness due to its advanced and purpose built features. The Company are first-to-market in Australia and among the few globally targeting the specific use of the product. Competitive Advantage The source of the Company's competitive advantage is both differential and cost advantages. The Company detailed unique features, benefits and characteristics that it offers in regard to its product which sets it apart from its competitors in the addressable market. The Company has the ability to produce its product at a lower cost than named competitors, allowing the Company to offer the product at a lower cost and generate a higher profit margin on its sales. Intellectual Property The Company is solely undertaking the innovation activity and is the owner of the IP it has developed and will develop in relation to its product. The Company has filed patent applications. The Company has appropriate non-disclosure agreements in place. The Company has operational procedures in place to further protect the IP. Information provided: The Company provided documents containing detailed information in relation to Company's product including: • Private ruling application dated DD MM YYYY. • Various documents including investor pitch deck, commercialisation strategy. • Responses to our questions received on DD MM YYYY. We have referred to the relevant information within these documents in applying the relevant tests to the Company's circumstances.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 360-A | Income Tax Assessment Act 1997 section 360-15 | Income Tax Assessment Act 1997 section 360-40 | Income Tax Assessment Act 1997 section 360-45