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Edited version of private advice

Authorisation Number: 1052335556720

Date of advice: 19 December 2024

Ruling

Subject: ESIC eligibility

Question 1

Does Company X meet the criteria of an Early Stage Innovation Company (ESIC) under subsection 360-40(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for the period DD MM YYYY to DD MM YYYY?

Answer 1

Yes

This ruling applies for the following periods:

DD MM YYYY to DD MM YYYY

The scheme commences on:

DD MM YYYY

Relevant facts and circumstances

The early stage test

1.              Company X is an Australian proprietary company incorporated in Australia and registered in the Australian Business Register on DD MM YYYY.

2.              Company X has X wholly owned subsidiaries, Company Y and Company Z. Company X is the head entity and acts as the Group holding company. Company X is part of an income tax consolidated group.

3.              Company X was incorporated in Australia within the last X income years (the latest being the current year), and in the in the income year before the current year Company X and its X wholly owned subsidiaries incurred total expenses of less than $XX.

4.              Company X and its X wholly owned subsidiaries derived total assessable income of less than $XX in the income year before the current year.

5.              Company X's equity interests are not listed for quotation in the official list of any stock exchange, either in Australia or a foreign country.

6.              Company X is developing a product for commercialisation and information that details its development and commercialisation activities was provided.

7.              In a ruling issued for previous periods, Company X qualified as an ESIC at the relevant test times. The basis for the decisions for the previous periods was that the company satisfied the principles based test in respect of the product being developed.

8.              Since the previous ruling was issued, Company X has continued to develop the product and with its commercialisation activities in relation to the product.

Assumptions

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

Further issues for you to consider

Not applicable.

Conclusion

Company X meets the eligibility requirements of an ESIC under subsection 360-40(1) for the period DD MM YYYY to DD MM YYYY, or the date when their 'product' has been fully developed and is ready for client use, whichever occurs earlier.

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