Early Stage Investment Company (ESIC)

Have you made an investment that may qualify for the ESIC Tax Concessions?

The Early Stage Investment Company (ESIC) scheme provides significant tax incentives for investments in qualifying early stage investment companies.

The tax incentives provide eligible investors who purchase new shares in an ESIC with a:

  • non-refundable carry forward tax offset equal to 20% of the amount paid for their qualifying investments. This is capped at a maximum tax offset amount of $200,000 for sophisticated investors and their affiliates combined in each income year
  • modified capital gains tax (CGT) treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than ten years may be disregarded. Capital losses on shares held less than ten years must be disregarded.

Investors that do not meet the ‘sophisticated investor’ test under the Corporations Act 2001 will not be eligible for any tax incentives if their total investment in qualifying ESICs in an income year is more than $50,000.

Is my company / investment ESIC eligible?

For an investor to be entitled to the tax incentives, the company must qualify as an early stage innovation company (ESIC) immediately after the new shares are issued to the investor.

A company will qualify as an ESIC if it meets both The early stage test and either the:

  • 100-point innovation test or
  • principles-based innovation test

Companies who have taken ESIC investment in FY19 must complete and lodge an early stage innovation company report before 31 July 2019.

How can we help?

If you would like to confirm the ESIC eligibility of your company, Prime can prepare an ESIC eligibility assessment.

If you believe your company has received an ESIC eligible investment or if you believe you have made an ESIC eligible investment and would like to ensure appropriate ATO lodgements have been processed, please contact:

Brisbane:

Sean Fincham – seanf@primefinancial.com.au

John Driscoll – johnd@primefinancial.com.au

Melbourne:

Paul Mineri – paulm@primefinancial.com.au

Simone Quin – simoneq@primefinancial.com.au

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Request a free consultation