Edited version of private advice

Authorisation Number: 1052266581793

Date of advice: 28 June 2024

Ruling

Subject: Early stage innovation company eligibility

Question

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 ('ITAA 1997') for the period DD MM YYYY to DD MM YYYY?

Answer

Yes.

This ruling applies for the following period:

DD MM YYYY to DD MM YYYY

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances.

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect, and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Background Facts.

1.    The Company is an Australian proprietary company incorporated in Australia on DD MM YYYY. The Company is not part of an income tax consolidated group and is a single company with no subsidiaries.

2.    The Company's Directors are Person A and Person B.

3.    The Company's registered office and principal place of business is situated at XXX.

4.    For the financial year ending DD MM YYYY, The Company incurred and earned the following:

•         Total expenses of AUD$XXX.

•         Total income of AUD$XXX.

5.    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.

6.    The Company is developing its own Intellectual Property.

Product Development.

7.    The Company is an innovative organisation and has developed a software solution for the XXX market.

8.    The system is intended to offer a new solution for its current and future customers.

Commercialisation Strategy.

9.    The Company is solely focused on commercialising its novel and innovative technology. The Company is in the early phases of raising capital and conducting research and development and supporting activities to bring its technology to market.

10.  The Company is genuinely focused on commercialisation. The Company's development and commercialisation team are fully committed to the translation of its product ideas into reality and have established a business structure and plan to do so.

High Growth Potential.

11.  The value proposition of the Company's product addresses a local and international addressable market opportunity of approximately $X based on research conducted by The Company.

12.  The Company's market during the first several years of commercial operation is likely to include those regions/countries that have regulatory frameworks that are defined as easy to navigate.

Scale up the Business.

13.  The Company's business model is scalable and has focussed on global commercialisation during development.

14.  Prior to entering global markets, development work needs to be undertaken to meet regulatory requirements and gain product acceptance in the XXX market.

Broader than local market.

15.  The Company has identified that the global market is large and continues to grow and lacks innovation. The opportunity to develop new products in this market appears to be significant.

16.  Product differentiation and reputation enhancement could possibly lead to an increase in global market share through sustainable competitive advantage.

Competitive Advantages.

17.  The Company is an Australian Company that will be creating Australian jobs and products powered by Australian innovation.

18.  The Company is the only Company in Australia, that is known to be on the path to developing its product on The Company technology platform.

19.  The Company owns all improvements made to The Company intellectual property.

20.  The Company is confident that being the first business to develop its products it will have significant potential value in the market.

Information provided:

1.    You have provided a number of documents containing detailed information in relation to XXXXX product, including:

•         Private Binding Ruling ('PBR') Application dated DD MM YYYY.

•         Various supporting documents.

2.    We have referred to the relevant information within these documents in applying the relevant tests to your circumstances.

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