Status requirements for Early Stage Innovation Company

This will status with attractions to encourage investors is available for companies that are involved in innovative activities.

To qualify for this special classification, a company normally needs to have been incorporated within the last 3 years and have expenditure of less than $1million and income of less than $200,000, both in the income year before the current year.

Some companies incorporated within 6 years and others registered in the Australian Business Register within the last 3 years can also be eligible.

When a company has passed the basic eligibility tests, the company then has to pass 1 of 2 remaining tests.

The first test is known as the “gateway test” and the company must earn at least 100 points from an evaluation of innovative activities such as:

• Research and Development – 75 points

• Accelerating Commercialisation Grant – 75 points

• Completed or undertaking an “Accelerator Program” – 50 points

• At least $50,000 paid for an Equity Interest in the company by non-associates – 50 points

• Ownership of a “Patent or Plant Breeder’s Right” – 50 points

• Ownership of an “Innovation Patent” or “Registered Design” – 25 points

The “gateway test” is on a self-assessment basis with the company required to prepare a substantiation file.

If 100 points not achieved, you can then undertake the “principles test” and identify the following…

Is the company genuinely focused on developing for commercialisation one or more new, or significantly improved products, processes, services, marketing or organisational methods?

Does the company have a high growth potential?

Does the company have a potential to be able to successfully scale that business?

Is the company’s address broader than local market?

Does the company have a potential to have a competitive advantage?

To achieve the status under the Principles Test, an application has to be prepared and submitted to the Australian Taxation Office, who will assess and advise whether the company qualifies as an “Early-Stage Innovation Company”.

Towers Business Development are familiar with this process and can assist companies in the preparation of the required documentation. To find out more, call us on 1800 232 088.