ESIC Directory is an advisory, review and listing service for Australian start-ups, angel investors, advisers, R&D partners, universities and accelerators. Learn about what we think it will takes for your company to be considered an early stage innovation company by the ATO, the tax concessions available, thresholds and enjoy the ample resources available. Search through companies we have vetted for ESIC compliance, find accelerator/grant/university and other programs as well as checklists, databases and more. Complete our online company and investor pre-assessments, ask for help, join our mailing list or find an adviser. It is a great place to connect.
Making Innovation More Investable
Eligible companies can offer a 20% tax offset
Capital Growth - Tax Free
Eligible Investor Caps and Conditions Apply
Investor Tax Incentives are here
Eligible companies can offer a 20% tax offset
Capital Gains Tax Exemption
Free Startup Pre-assessment and indicative ESIC status tracking/listing
If you are an early stage Australian company that is considering a fundraising ESIC status can be important. All other things considered ESICs are more attractive to investors so you owe it to your self to find out more. We find the easiest way to do this is to take our free online pre-assessment. It may help determine that you are already an ESIC or alternatively help you to plan any extra steps required to confirm your status as an ESIC, for example; gaining points or taking a Ruling to the ATO.
ESICs who are assessed on the principal basis must be competitive, scalable, high potential, companies addressing more than the local market, by definition.*
It's no wonder they are rare and difficult to track, until now.
Our database of pre-assessed ESIC's can help you keep track of your candidate, learn more about the tax incentives and network with the wider innovation community.
To help early stage companies progress through the complexities of ESIC eligibility and keep would-be investors informed, we offer a facility to track and update you via our directory, allowing status updates isn't without risk as ESIC status only ever ultimately determined by the ATO, however our website aims to help Startups go from ESIC curious to ESIC when the criteria are met, without the hassle.
ESIC status is designed to be temporary and time limited so users must be mindful of assessment dates. Our assessment is not a substitute for professional sign-off (unless that is indicated by an attached ATO ruling) and each ESIC investor agrees to taken personalized tax advice and not rely upon our free service. If you are ok with that, then happy searching!
It takes all sorts to innovate so it’s no surprise that ESIC Directory has grown into an impressive network.
Feel free to join us and reach out to anyone you are interested in teaming up with.
Are you an ambitious investor keen to maximize the new tax incentives in search of promising and innovative companies?
Investors in ESICs can receive a non-refundable carry-forward tax offset of 20% of the value of the investment as well as a CGT exemption on capital gains provided the shares in an eligible ESICs have been held between 1 and 10 years.
To qualify, both the ESIC and the Investor must be eligible.
Why not check your eligibility via our free online assessment tool to help ensure any potential gains can access the 20% rebate and disregard capital gains on the ESIC share sale.
An introduction to the ESIC concessions with RSM's R&D Tax Director Stephen Carroll.
Stephen explains the innovation investment tax incentive for Australian businesses and give some examples of early stage innovation businesses who would benefit from the incentive.
Starting up a business is a major undertaking, so it is easy to assume that you are breaking new ground and destined to be eligible under these concessions, when in fact the tax incentives are not designed to apply to most early stage companies.
To help make that process clearer we've developed online pre-assessments and list FAQ, guides and postcode search for innovation hubs near you.
Even with all this information some are still left pondering, am I in principal an eligible early stage company or investor? If that's you, please read on and do not hesitate to lodge an enquiry or jump onto our chat software.
Please keep in mind that these are targeted measures that will be subject of detailed review by the Australian Tax Office. The onus is upon the investor to prove that they were a qualifying investor and that the company allotting (issuing) the shares was an eligible early stage innovation company (ESIC) at the test time.
Within the attached pages, you will find substantial references, listings and commentary regarding the requirements. Utilize them, before your invest, contact us directly, or complete one or both of the online pre-assessments. We look-forward to helping, connecting or refering your company (be that an investment or as your own early stage venture).
To make sure the incentives only apply to innovative activities, the eligibility criteria includes a second limb determines that the company is involved in innovation.
The company can 'self‑assessed' against either a principles-based or objective test, or by receiving a determination from the Australian Tax Office.
Each investor can choose the method / minimum standard required, however practice would suggest that the objective (points based) qualification and ATO ruling are the most prized methods.
Securing 100 or more points through the 8 gateways provided can be difficult, so our website offers you hundreds of partners that can help, or alternately a postcode search to find who's closest to you.
Securing 100 points can be achived via a range criteria including;
the tax return research and development ratio (prior year),
award of an 'Accelerating Commercialization Grant',
completion or undertaking an eligible accelerator program,
receipt of share investment from 3rd parties of $50,000 or more,
registration of an innovation or standard patent or plant breeders right
licensing one of the above rights,
co-development / commercialization of an innovation with a listed higher education provider or research and development partner
*Points vary depending on the objective milestone above
Are you an eligible early stage company?
- Less than 3 tax years since your incorporation
- Registered on the ABR within the last 3 tax years
- Less than $200,000 Taxable Income
- Less than $1,000,000 Total Expenses (last tax year)*
- Over 3 and under 6 tax years since incorporation (a 3 year expense test applies)
To meet the principals based innovation test:
• Focused on developing a new or significantly improved innovations for commercialisation
• That innovation must have a high growth potential
• The potential to be able to successfully scale up that business
• The potential to be able to address a broader than local market
• The potential to be able to have competitive advantages for that business
Do you command 100 points or more from the objective innovation test?
- 25 to 75 points are awarded in 8 predefined categories
- Independent evidence, Tax records and or Registration documents are needed
- Preliminary / unregistered / unsigned documentation is insufficient
- Both Government and Non-government entities award points
Points categories include:
- ATO R&D tax expenditure.
- Eligible Accelerator programs.
- Breeder's right or design rights.
- $50,000 independent investment
- Co-development with eligible Universitities, and
- Grant recipient under the Entreprenur's programme.
Having a great little business may not be sufficient to establish your company as an ESIC worthy of generous taxation concessions.
The following details help to expand on the innovation pathways, milestones and alternatives for ESIC qualification. You may seek to qualify independently or seek recognition via government or eligible venture partnering. Ultimately it is the ATO who determin if an investment will qualify.
We have broken this down into 3 parts, an introduction to the pathway, key requirements and options for assistance. You can use the menu navigation to jump from or to any section of interest, and or reference any of the extended resources and networks available.
A company will be awarded 25 points if it has a written agreement to co-develop and commercialize an innovation with an entity registered under s29 of the Industry Research and Development Act 1986
We list R&D agents based on historic .gov records (confirm at investment)
A company will earn 50 points towards the 100 point innovation test where its current year research and development (R&D) spend is greater than 15% and less than 50% when compared to total expenditure
See your accountant re the R&D rebate
Be sure you have the prior year tax lodgment
A company will earn 75 points towards the 100 point innovation test where its current year research and development (R&D) spend is 50% or more when compared to total expenditure.
R&D spend is registerd and found on the return.
Check to total expenses
The ESIC concessions have been designed with tax in mind, so it should be no surprise that the ATO will use the company tax return to verify your innovation claims.
Existing R&D tax concessions are in them selves attractive, however they do require detailed records and typically the assistance of a trained taxation professional.
Your typical tax agent may not have the right knowledge to progress the claims so feel free to search our database for an expert to help maximize your tax refund, and help with next years ESIC qualifications at the same time.
Companies that have received funding support under the Australian Government's Entrepreneurs' Programme at any time are entitled to 75 points towards the 100 point innovation test.
AC grant allocation may require revenue so it can be difficult to secure points for some Startups via this channel
If the company has received an Accelerating Commercialization Grant under the Accelerating Commercialization element of the Commonwealth’s Entrepreneur’s programme it has also been awarded with 75 points towards ESIC status.
We offer a quick reference search and endeavor to maintain an update listing, however due to integration issues we cannot guarantee its completeness, so please feel free to notify us if your listing is absent or about to update.
If you have read up on the 100 point innovation test, you will note that graduates of eligible accelerator programs are awarded 50 points.
Find out if you are already halfway though the innovation gateway by reviewing the programs we have identified.
*These projects are supported by funding from the Australian Government under its Entrepreneurs’ Programme
Australia already enjoys a reputation as one of the best places in the world to innovate, and our accelerators are no exception. So why the short list of eligible programs?
The ATO do not publish a listing, which was promised prior to commencement of the new laws. The trouble for the ATO (and us), is that eligibility isn't a sure thing, so we offer some helpful notes and the opportunity for new or existing accelerators to contact us and join the directory.
• Selected entrepreneurs in an open, independent and competitive manner; and
• Provides time limited support for entrepreneurs with start up businesses; and
• Have previously run its accelerator programs for entrepreneurs, for at least 6 months; and
• Such programs have been completed by at least one cohort of entrepreneurs.
We are keen to grow our listing, ether by assessing ESIC's undertaking a program or by referral to the programs itself. If you know some, feel free to drop us a line. It's worth 50 points towards qualification and plenty of love from your fellow startups and investors alike
It is the company and not the individual(s) that must be enrolled and accredited to the program
ESIC's are awarded 25 points towards the innovation test when they secure a written agreement to co-develop and commercialize a new, or significantly improved, product, process, service, marketing or organisational method with an eligible university.
Gain 25 points for either University or Partner development, but not both!
Having a patent or plant breeders right granted within the past 5 years can provide a company with up to 50 points towards the 100 point innovation test, although we will assume you have consulted a legal expert prior to securing your assets.
If you do not already have a trusted IP expert on your team? If not consider searching our listing of experts.
Points are not awarded for provisional lodgments
Licence of new local and offshore IP can be eligible
Many investors in early stage companies prefer to remain anonymous for the most part. Whereas others wish to promote themselves as ready and willing to advance funding, in order to attract a higher volumes of investment opportunities. Its not for us to determine this preference, however we do note that taxes tend to remain a private matter regardless.
As we have previously stressed, ESIC Directory is not an investment service, it is a taxation service, yet, just as investors are glad to be in a position to use the directory as a guide to compliance with the new tax regime, ESIC's may be equally desirous of the status of a would be investor, who is likely to demand confidential and commercially sensitive details as part of the DD.
We are conscious of this need however for privacy, compliance and legal reasons we require that companies and investors communicate directly (or via trusted advisers) through this process and not via esic.directory.
An ESIC is an Early Stage Innovation Company. In order for a company to qualify as an ESIC via the principals based assessment a company must have high growth potential, be able to scale, address a broader than local market, and have competitive advantages. Other ESIC's can fast track independent eligibility via a points based objective test that helps to auto assess a companies innovation potential.
The government provides tax incentives for investments in ESICs. Investments in ESICs may be eligible for a 20% tax offset, and gains on the sale of an ESIC investment may be capital gains tax (CGT) free if shares are held for between 1 to 10 years.
These incentives are available even where ongoing investment in an ESIC no longer qualifies for the concession, providing the company was an ESIC when the investment occurred.
The tax benefits are not limited to exempt, high net worth investors or professionals, they can be enjoyed by any Australian taxpayer, however qualifying investments by non exempt investors (per s708) are strictly limited to $50,000 or less, meaning that an annual tax offset cap of $10,000 applies and ESIC investment by a retail investor above the cap will disqualify the taxpayer in that tax year.
Wholesale and exempt investors are subject to a cap on the tax offset of $200,000 per annum, however the capital gains tax relief is unlimited.
To learn more about your status as an Investor, you can undertake a Pre-Assessment here.
As an investor, an ESIC provides an opportunity to invest in an innovative company before its potential has been reached whist enjoying generous
tax incentives. Extreeme care must be taken, ESIC's are early stage high risk ventures that are much more likely to fail, you should seek professional advice and undertake your own due diligence before making any investment and not rely upon these taxation criteria as an indication of future returns. ESIC Directory is a taxation service only.
Our ESIC Database provides a listing of companies at various stages of assessment for the concessions. This service is for wholesale eligible investors already associated with the companies, or as a reference to others seeking to learn more about ESIC companies in general.
Investment in one or more ESIC's may be exciting and tax advantaged however, investors must note that the onus is upon you to prove your investment qualifies for the concession. Investors must obtain substantive documentation to support every element of qualification and keep those records for as long as 5 years after the eventual disposal of the investment. A listing on our directory does not qualify as substantiation, even where it is accompanied by an lawyer, accountants or ATO rulling. Investors wishing to fully verify the tax offset and CGT treatment must keep independent records and should consider a private ruling request with the Australian Tax Office if they have not already done so.
Our directory lists a number of leading tax and innovation experts who can assist in all matters relating to these concessions, including ruling requests.
Some say that ideas are easy and its all in the execution, others spend 100's of thousands to protect an innovation before seeking to commercialise, either may hold true in some markets and not in others.
ESIC Directory provides early stage innovation companies with the platform you need to advance your company prospects through ESIC. We think of it as a new type of company, though you didn't need to go to the company regulator to become one. For that matter, you don't need us either, though you will most likely need costly expert advice so these pages can be considered a valuable first point of call or short cut.
Around now, you might be thinking I can read this later or print some brochure when I need it, which may be true, ESIC expires and the Directory is happy to help, and on the off chance your enquire is a curly one, you will of course be referred to full fee paying option, under no obligation.
Why not read more about ESIC's and decide after you read our online form?
Just how innovative is my company?
Accelerating Commercialisation Grant
ATO R&D Tax Incentive
ASIC Company Search
If you need assistance in confirming your business as an ESIC, or wish to innovate, or you simply want to learn more about the benefits to investors and entrepreneurs of being registered as an ESIC, we are here to help. We provide advisory services to anyone who would like to learn more about ESIC.
ESIC directory can assist businesses that want to clarify ESIC status to make themselves more attractive to investors, however this can be more than a little exersise, that is why we list ESIC advisers we think you can engage. The referral is free, and we do not take commission or payment for the introduction.
Our network is not definative or static, so we are actively looking for advisers who are knowledgeable about ESICs and the tax incentives behind early stage investments to join our community. We will establish relationships and help ensure that our clients get the services they need.