Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 360.40

Early stage innovation companies

  (1)   This subsection applies to a company at a particular time (the test time ) in an income year (the current year ) if:

  (a)   the company was:

  (i)   incorporated in Australia within the last 3 income years (the latest being the current year); or

  (ii)   incorporated in Australia within the last 6 income years (the latest being the current year), and across the last 3 of those income years before the current year it and its * 100% subsidiaries (if any) incurred total expenses of $1 million or less; or

  (iii)   registered in the * Australian Business Register within the last 3 income years (the latest being the current year); and

  (b)   the company and its 100% subsidiaries (if any) incurred total expenses of $1 million or less in the income year before the current year; and

  (c)   the company and its 100% subsidiaries (if any) had a total assessable income of $200,000 or less in the income year before the current year; and

  (d)   at the test time, none of the company's * equity interests are listed for quotation in the official list of any stock exchange in Australia or a foreign country; and

  (e)   at the test time, the company has at least 100 points under section   360 - 45, or:

  (i)   the company is genuinely focussed on developing for commercialisation one or more new, or significantly improved, products, processes, services or marketing or organisational methods; and

  (ii)   the business relating to those products, processes, services or methods has a high growth potential; and

  (iii)   the company can demonstrate that it has the potential to be able to successfully scale that business; and

  (iv)   the company can demonstrate that it has the potential to be able to address a broader than local market, including global markets, through that business; and

  (v)   the company can demonstrate that it has the potential to be able to have competitive advantages for that business; and

  (f)   at the test time, the company is not a foreign company (within the meaning of the Corporations Act 2001 ).

Note:   For the purposes of paragraph   (e), one way a company can demonstrate something is by engaging the services of another entity.

  (2)   For the purposes of paragraph   (1)(c), disregard any of the following:

  (a)   an Accelerating Commercialisation Grant under the program administered by the Commonwealth known as the Entrepreneurs' Programme;

  (b)   an amount required to be included in the company's assessable income under subsection   355 - 450(1).

  (3)   Subparagraphs   (1)(e)(i) to (v) cannot be satisfied for:

  (a)   a product, process, service or method; or

  (b)   an improvement to a product, process, service or method;

that is of a kind prescribed by regulations made for the purposes of this subsection.

  (4)   Subsection   (1) does not apply to a company if, before the test time, the company engaged in an activity of a kind prescribed by regulations made for the purposes of this subsection.


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