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Edited version of private advice
Authorisation Number: 1052250900257
Date of advice: 15 May 2024
Ruling
Subject: Entitlement to the early stage innovation companies tax offset
Question
In the event that a written notice of determination was not provided to the member within 3 months after the end of the income year ended 30 June 20XX, will the Commissioner exercise his discretion to extend the period in which the trustee must give the notice under subsection 360-30(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
This ruling applies for the following period
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
1. You are the trustee of Trust X.
2. Trust X is a discretionary trust that was established by a trust deed.
3. Person X is the primary beneficiary of Trust X.
4. Company Y was incorporated in Australia.
5. Company Y received a private ruling confirming the company is a qualifying early stage innovation company ('ESIC') under subsection 360-40(1) of the Income Tax Assessment Act 1997 ('ITAA 1997'), for the financial year ending 30 June 20XX.
6. You accepted an offer to purchase shares in Company Y for a total consideration of $XX,XXX ('the investment') during the financial year ending 30 June 20XX.
7. Company Y issued XXX,XXX shares to Trust X in return for the consideration paid.
8. You satisfy the requirements for entitlement to an ESIC tax offset under subsections 360-15(1) and (2) of the ITAA 1997, in relation to the investment in Company Y.
9. You have determined the ESIC tax offset in relation to the investment under section 360-25 and subsection 360-30(1) of the ITAA 1997 to be $X,XXX.
10. You did not make further investments in any other early stage innovation companies in the financial year ending 30 June 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 360-A
Income Tax Assessment Act 1997 section 360-30
Reasons for decision
All legislative references are to the ITAA 1997 unless otherwise indicated.
Written notice of determination
Subsection 360-30(4) states:
The trustee or partnership must give the *member written notice of the determination. The notice:
(a) must enable the member to work out the amount of the member's *tax offset by including enough information to enable the member to work out the member's share of the notional tax offset; and
(b) must be given to the member within 3 months after the end of the income year, or within such further time as the Commissioner allows.
Application of the law to your facts
1. You did not provide a written notice of determination to any members of Trust X within three months after the end of income year ending 30 June 20XX.
2. You requested the Commissioner allow further time for you to provide the written notice of determination to Person X as member of Trust X.
3. You were previously unaware of the availability of an ESIC tax offset for the investment in Company Y.
4. The Commissioner will grant discretion to extend the period for you to provide the written notice of determination to Person X in accordance with paragraph 360-30(4)(b).