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Edited version of your written advice

Authorisation Number: 1051350664917

Date of advice: 16 March 2018

Ruling

Subject: Early stage innovation company eligibility

Question

Does the Company satisfy the criteria of an Early Stage Innovation Company (ESIC) pursuant to subsection 360-40(1) of the Income Tax Assessment Act 1997 (ITAA 1997)

Answer

Yes

This ruling applies for the following period:

XX XX 20XX to XX XX 20XX

The scheme commences on:

XX XX 20XX

Relevant facts and circumstances

The Company

Branded product

Commercialisation strategy

Projections

Addressable market

Share issue

The Food Product

In Australia the food product is already marketed and sold by a number of producers, many of which have their own retail stores.

Concept of the specialised equipment

Legislative framework around the slaughter of animals for human consumption

The Company’s Competitors

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 1 997 Section 360-45

Reasons for decision

Question 1

Does the Company satisfy the criteria of an Early Stage Innovation Company (ESIC) pursuant to subsection 360-40(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Summary

Yes. The Company meets the eligibility requirements of an ESIC under subsection 360-40(1).

Detailed reasoning

All legislative references are to the Income Tax Assessment Act 1997 unless otherwise stated.

‘The early stage test’

Incorporation or Registration – paragraph 360-40(1)(a)

Total expenses - paragraph 360-40(1)(b)

Assessable income - paragraph 360-40(1)(c)

No stock exchange listing - paragraph 360-40(1)(d)

Innovation tests

‘100 point test’ – paragraph 360-40(1)(e) and section 360-45

‘Principles-based test’ – subparagraphs 360-40(1)(e)(i) to (iv)

Developing new or significantly improved innovations for commercialisation

High growth potential

Scalability

Broader than local market

Competitive advantages

Application to your circumstances

Test time

Current year

The Early Stage test

Incorporation or Registration – paragraph 360-40(1)(a)

Total expenses – paragraph 360-40(1)(b)

Assessable income – paragraph 360-40(1)(c)

No Stock Exchange listing – paragraph 360-40(1)(d)

Conclusion on early stage test

Principles based test

Developing new or significantly improved innovations for commercialisation – subparagraph 360-40(1)(e)(i)

Product innovation

Process Innovation

Genuinely focused on developing for commercialisation – subparagraph 360-40(1)(e)(i)

Conclusion on subparagraph 360-40(1)(e)(i)

High Growth Potential – subparagraph 360-40(1)(e)(ii)

Scalability – subparagraph 360-40(1)(e)(iii)

Broader than local market – subparagraph 360-40(1)(e)(iv)

Competitive advantages – subparagraph 360-40(1)(e)(v)

Conclusion on principles test

Conclusion


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