| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052341841609
Date of advice: 11 December 2024
Ruling
Subject: Early stage innovation company
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 for the period 1 July 20XX to 30 June 20XX?
Answer
Yes.
This ruling applies for the following period:
1 July 20XX to 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Background Facts
1. The Company is an Australian proprietary company incorporated in Australia on X date.
2. For the financial year ending 30 June 20XX, the Company did not incur expenses nor earn income.
3. 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.
4. The Company does not have any wholly or partly owned subsidiaries. The Company is not part of an income tax consolidated group.
5. The Company is not a foreign company within the meaning of the Corporations Act 2001 (Cth).
6. The 'test time' for determining if the Company is a qualifying ESIC, will be upon the issue of qualifying shares on a particular date or dates on or after 1 July 20XX, and on or before 30 June 20XX.
Overview
7. The Company was created by Y.
8. The Company has a signed development agreement that confers upon it the full rights and use of work developed.
9. The Company's team is formed by highly experienced individuals.
Product Development
10. The Company is developing an AI system that is innovative.
11. The primary goal of the Company is to develop the innovation that will assist users to provide a seamless experience.
12. The innovation is being purpose-designed, which means that actions will be processed are in a real time.
Product Development Stages
13. The Company is currently in discussions with corporate company owners regarding an enterprise level agreement. Progress on these fronts could potentially bring additional international commercial opportunities as well.
Commercialisation Strategy
14. The Company is undertaking product development on the innovation to become the preferred platform in the market.
15. The Company has assembled a team with complementary experience in commercialisation, innovation and technology.
16. The Company will initially launch in Australia, with plans to expand overseas.
High Growth Potential
17. The Company has presented a 'Business Model' demonstrating high growth potential.
Scale up the Business
18. The Company has the potential to successfully scale up as the bulk of the development cost is incurred up front. The innovation has been engineered from day one according to best practice to provide for hyper-scaling.
Broader than Local Market
19. The Company's CEO and shareholders have a global outlook, though is starting local to perfect the innovation, thereafter they plan to expand rapidly overseas leveraging existing personal and business relationships.
Competitive Advantages
20. In the rapidly evolving landscape of technology, the Company asserts their innovation will offer a comprehensive suite of tools designed to enhance every aspect of their future clients workflow.
Conclusion
21. The Company meets the eligibility criteria of an ESIC under subsection 360-40(1) for the income year ending 30 June 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 360-40
Income Tax Assessment Act 1997 section 360-45