An E.S.I.C. is a company that is recognised as haveing Early Stage Innovation Company status.
Newly incorporated Australian companies may seek to confirm or use this status, via self certification, 3rd party pre-validation (such that we provide) or a binding Australian Tax Office determination of the tax outcome for the company or tax payer or both.
An ESIC will typically seek this status to make it (potentially) more attractive for taxation reasons, however investors must note the ownus is upon them to assess an support the claim (even after the investment has been sold).
The governments stated aim on introduction of these measures is new investment, hence the incentives are not open to all investment, for example; Widely held companies and affiliates are specificly excluded classess of investor.
To find out if you qualify, feel free to try our investor Pre-Assessment here;
WHY INVEST IN AN ESIC?
As an investor, an ESIC provides an opportunity to invest in an innovative company at a stage that is earlier than typically contemplated. This may be well before the business potential or cashflow have been reached. As such this class of company can be granted generious tax incentives provided all the requirements are met.
Investments in eligible ESICs attract a 20% tax offset and gains on the sale of an ESIC investment may be CGT free (where shares are held for between 1 to 10 years).
To help avoid a wholesale reduction in revenue, these measures have been targeted at companies with potential for high growth, scale, large markets and competitive advantage. Alternately, a company can fast track eligibility via the 'objective points test'.
The 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 (i.e. assuming your early stage company is becomes a later stage success).
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.
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.
ESIC's are early stage high risk ventures that are much more likely to fail, as such you should seek professional advice and undertake your own due diligence before making any investment and not rely upon taxation criteria as an indication of future results. The ESIC Directory is a taxation service only and we make no prediction regarding to financial matters such as gains, dividends or profits.
Our Direcotry provides a listing of companies at various stages of assessment for the concessions. This service is for exempt, wholsale investors already associated with the companies, or as a reference to others seeking to learn more about ESIC companies in general.
ESIC 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 accountants certificate or ATO private ruling. Investors must take all steps necessary including enquiries as to the facts underscoring the claim.
Investors wishing to fully verify the tax offset and CGT treatment should consider a private ruling request with the Australian Tax Office, on occasion some, though not all ESIC's we list will have a supporting ATO ruling.
Our directory lists a number of tax and innovation consultants who can assist in all matters relating to these concessions, including ruling requests. This list is not exhaustive, or exclusive and is not an edorsement of the service provided.
Tax advantaged investment
with confidence & convience
ESIC Directory is a taxation service for startups and investors. We pride ourselves for being up to the minute regarding ATO interpretation and guidance, making complex decisions quickly and with relative ease (and or automation).
Our service does not include any financial product or investment advise. You must see a qualified financial planner, broker or agent in that regard.
Review / Listing on the directory provides taxation guidance only, subject to the limitations within our terms & conditions and or with regards to the certification provided (and referenced) by affiliated, licenced tax agents.
Tax agent registrations can be reviewed in real time at http://www.tpb.gov.au/ and we encourage you to make your own enquiry regarding professional designations & memberships.
Eligible Exempt Investors
Many investors in early stage companies prefer to remain private, or at least private until a time of their choosing (such as IPO). Others may wish to promote themselves as ready and willing to advance funding, in order to attract a higher volume and perhaps quality of investors. Its not for us to comment.
As noted above, 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 and continue to developing our gateway to help manage that process.