Private ruling: Early-stage innovation company eligibility
Date of advice: 28 April 2026
Published: 10 August 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's registered office and principal place of business is situated in a state or territory in Australia. The Company has no wholly owned subsidiaries and is not part of an income tax consolidated group. 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 provided the names and roles of their founding team. For the income year ended 30 June 20XX, the Company incurred less than $1 million expenditure and had less than $200,000 assessable income. The Company is undertaking a capital raise which will result in new ordinary class shares being issued to qualifying investors. Product Development The Company is developing a new product that will address key inefficiencies in a particular industry. The Company described the product's key innovations. The Company detailed tangible developments steps it has completed, and the steps required to be completed before the product is considered to be fully developed. The Company provided details of validation it has received from industry, academic and innovation communities. Commercialisation The Company is a startup company focused solely on the research, development and commercialisation of its innovative product. The Company's commercialisation roadmap includes developing a minimum viable product (MVP), piloting, launching into the Australia market, obtaining regulatory approvals, followed by expansion to global markets. The Company's commercialisation plan includes establishing various strategic partnerships, such as with distributors. The Company's revenue model demonstrates the company's intention to commercialise its products and generate economic value for the company from sales and potential licensing. The Company detailed a number of activities it has undertaken, or plans to undertake, toward commercialisation. The Company provided an estimate of when the product will be fully commercialised. High Growth Potential The Company's business relating to product has high growth potential, evidenced by the size and critical needs of its assessable market. The Company's product targets a large, expanding market with substantial total addressable market (TAM) growth potential through global expansion. The Company provided the value of its TAM, its serviceable addressable market (SAM), and its serviceable obtainable market (SOM) from market research undertaken. The Company detailed the extent of the problems faced in the particular industry that its product will address. Interest shown in the Company's product and establishing strategic relationships also demonstrated that the business has high growth potential. The Company's business has the potential to increase its economic value through planned future expansion and development of further new products. Scale up the business The Company demonstrated that it is well positioned to rapidly scale its business. The Company provided its revenue and expenses forecast for the next X years. The Company's business model is highly scalable. The forecast demonstrates the capacity to multiply revenue materially while operating costs increase at a less-than-proportional rate. Future products developed by the Company are not expected to require an increase in headcount. 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 listed potential users of its product in the global addressable market. The Company's initial focus is to service the national Australian market followed by expansion to the global markets. Competitive Advantages The Company's patent-protected proprietary technology, first-mover advantages, and specialised technical team create barriers to entry. The Company provided details of its competitor analysis in which the Company named principal competitors and their solutions, described each competitor's product and noted its limitations. The Company detailed the attributes of its innovative product that support the Company's competitive position, demonstrating both differential and cost advantages. Intellectual Property The Company owns the intellectual property (IP) it is developing. The Company has taken steps to secure its IP through patents. The Company detailed how it also protects its IP through a number of measures including confidentiality and non-disclosure agreements, maintaining trade secrets,confidential design methods. Information provided The Company provided various documents containing detailed information in relation to its product including: • Private ruling application dated DD MM YYYY. • Pitch deck, commercialisation timeline, financial projections. • Response to our request for information received DD MM YYYY. 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)