Why invest ? - ESIC Directory

 

ESICs provide a valuable investment opportunity for anyone searching for an innovative, high-growth company.

 

 

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 (amongst other things) have high growth potential, be able to scale, address a broader than local market, and have competitive advantages. Other ESIC's can fast track qualification 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.

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.

Individuals claim the ESIC tax offset by simply disclosing the amount in T9 in the personal income tax return.​

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 well before its potential has been reached whist enjoying generous tax incentives. 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 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. As such 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. Investors wishing to fully verify the tax offset and CGT treatment should consider a private ruling request with the Australian Tax Office.

Our directory lists a number of leading tax and innovation experts who can assist in all matters relating to these concessions, including ruling requests.