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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051500372517

Date of advice: 29 March 2019

RULING

Subject: Early Stage Innovation Company - eligibility renewal.

Question:

Does Company A 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 periods:

1 XX 20XX to 30 YY 20YY

The scheme commences on:

1 XX 20XX

RELEVANT FACTS AND CIRCUMSTANCES

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Information provided

Assumption(s)

Not applicable.

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

REASONS FOR DECISION

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

QUESTION:

SUMMARY

Company A meets the eligibility requirements of an ESIC pursuant to subsection 360-40(1).

DETAILED REASONING

Qualifying Early Stage Innovation Company

‘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)

APPLICATION TO YOUR CIRCUMSTANCES

TEST TIME

Current year

THE ‘EARLY STAGE TEST’ – paragraphs 360-40(1)(a) - (d) ITAA 1997

Incorporation or Registration – paragraph 360-40(1)(a) ITAA 1997

Total expenses – paragraph 360-40(1)(b) ITAA 1997

Assessable income – paragraph 360-40(1)(c) ITAA 1997

No Stock Exchange listing – paragraph 360-40(1)(d) ITAA 1997

29. In applying the requirements of paragraph 360-40(1)(d), Company A must not be listed on any Stock Exchange in Australia or a foreign country at the test time.

CONCLUSION FOR EARLY STAGE TEST

THE ‘100 POINT TEST’ – paragraph 360-40(1)(e) and section 360-45

THE ‘PRINCIPLES-BASED TEST’ – paragraph 360-40(1)(e) ITAA 1997

CONCLUSION FOR PRINCIPLES BASED TEST

Company A satisfies the principles based test as it will satisfy the requirements within subparagraphs 360-40(1)(e)(i) to (v) for the period commencing 1 July 2017 until 30 June 2018, or the date when their ‘service’ has been fully developed and is ready for client use, whichever occurs earlier.


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