Getting ready for an ATO ruling

2017-11-21 13:04:56

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Faced with standoffish investors, many companies are considering an ATO private ruling to confirm that they qualify as an early stage innovation company (ESIC).

Whilst a ruling would be based on the facts at a given point of time (like our indicative listings), the appeal of the regulatory approval is obvious.

So what sort of things are needed and should I take that approach with my company?
 
Some of the details are require include;

- Group structure;
- Financial statements of the company and any '100% owned subsidiaries'; 
- Intellectual property or provisional/granted patents relevant to the company;
- Current documentation, including; 
      Business plan, inc;
             - description of the innovation being developed
             -  evidence of steps or activities taken and proposed in commercialisation 
             - timeline
             - competitor analysis (comparative) 
- Prior year Company Income Tax Return(s)
- Details as requested by your assessors

Essentially the Private Binding Ruling (PBR) is a mini audit, so don't expect to convert the ATO staff into seed investors. All though, equally you may be surprised to find that they are keen to work with you towards an outcome, particularly if you've done the required groundwork.

But why wouldn't you do an ATO PBR?
 
- Time.... (expect 6-18 weeks depending on how well prepared you are, and how complex it the innovation is)
- Cost....  (expert advice isn't free, and going it alone is problematic and could be very costly)
- Options (what about the 100 points test! is AOK in the right situation)
- Failure  (yes, that's right, you could fail a PBR on the principals test)

The last point is of interest particularly due to the tendency for firms to believe that they are the only ones innovating when in reality the market is quickly moving and pinning down a potential advantage is less important than growth. If that sounds like you, then a PBR could be a bad move, particularly when 100 points could be only a $50k investment and R&D claim away!

In any-case, we are keen to assist and happy to provide you a free interchange for investors and the company to keep track of your ESIC status whilst you get back to making the impossible happen!

You rule,

Tom

 

Published By: Tom

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