Edited version of private advice

Authorisation Number: 1052374928100

Date of advice: 19 March 2025

Ruling

Subject: ESIC 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 periods:

DD MM YYYY to DD MM YYYY

The Scheme commences on:

DD MM YYYY

RELEVANT FACTS AND CIRCUMSTANCES

The Early Stage Test

1.  The company is an Australian proprietary company incorporated in XXX on DD MM YYYY.

2.  For the financial year ending DD MM YYYY, the company incurred the following expenses and had the following assessable income:

•                     Total expenses of $xxx

•                     Total assessable income of $yyy

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.

Background Facts

4.  The company has no 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 DD MM YYYY, and on or before DD MM YYYY.

7.  The Company issued shares to investors in the relevant ruling periods.

Product Development

8.  The company is developing and commercialising the Platform.

9.  The company's platform offers the potential to overcome many of the challenges of the company's addressable market.

10.  The Company has demonstrated that it has taken tangible steps to identify a gap in the market, to create an innovative product to fill the gap in the market and to commercialise the innovation to generate revenue.

11.  The Company is 'genuinely focussed on developing new or significantly improved innovations for commercialisation'.

Product Development Stages

12.  The undertook serval activities to develop its platform in the relevant year.

13. & The Company has developed a plan to validate its technology at scale, enabling commercial production by the year 20ZZ.

High Growth Potential

14.  The Company demonstrates that its innovation has the potential for high growth within a broad addressable market.

Scale up the Business

15.  The Company's addressable market includes both the Australian market and overseas markets, therefore, there is potential to successfully scale the business.

Broader than Local Market

16.  The Company demonstrates that its innovation has the potential for high growth within a broad addressable market, its ultimate addressable market being both Australian and global markets. The Company, therefore, addresses a broader market than just the local market and is not confined to a local city, area or region. The Company's market can clearly be expanded to a broader market in the future.

Competitive Advantages

17.  The Company has demonstrated the potential for it to have competitive advantage within the market, The company is developing their technology to address a number of discrete markets and is continuing to develop their technology.

Information provided

18.  You have provided a number of documents containing detailed information in relation to the company's technology, including:

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

•                     Response to further questions provided DD MM YYYY

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

20.  The company proposes to issue new shares to various investors to assist in funding the continued.

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

CONCLUSION

The company meets the eligibility criteria of an ESIC under subsection 360-40(1) of the ITAA 1997 for the period DD MM YYYY to DD MM YYYY or the date when their technology has been fully developed and is ready for client use, whichever occurs earlier.