Confirm Your ESIC Status and Attract Investors
Seeking investments to fund your future? ESIC tax incentives provide massive benefits for investors, allowing innovative businesses to blast off like a rocket. Our consultants help with all aspects of company and investor ESIC eligibility by providing advice that gives peace of mind.
Learn More About ESIC Eligibility and Early Stage Investors
What is an Early Stage Innovation Company (ESIC)?
An Early Stage Innovation Company (ESIC) is a startup that meets specific criteria according to the ATO. It must:
- Be a domestic company under the Corporations Act 2001
- Pass the early stage test by having less than $200,000 in revenue and less than $1 million in expenses
- Pass either the 100-point innovation test or principles-based innovation test.
The ESIC tax incentives for investors are:
- A 20% tax offset on up to $200,000 in qualifying shares per income year
- A 10 year exemption on capital gains tax for investments held as shares in an ESIC.
Who Can Invest in an ESIC?
Anyone can invest in an ESIC, but for investments of more than $50,000 in a year, eligibility for the early stage tax incentives depends on whether you qualify as a "sophisticated investor" or not.
A sophisticated investor is usually someone who:
- Has a gross annual income of $250,000 or more in the last two income years, or
- Has net assets of at least $2.5 million.
While there's no limit to the amount you can invest in an ESIC, the early stage investor tax offset is capped at a maximum amount of $200,000 for each income year for sophisticated investors.
If you don't qualify as a sophisticated investor, you can still invest in an ESIC, but to be eligible for the tax incentives, your total investment in all ESICs in a tax year is capped at $50,000.
Get Peace of Mind Before You Invest
ESIC investments made now might not be checked by the ATO for ten or more years. What evidence will you have in 2034 when the ATO comes knocking? Our experienced team of funding and tax law experts can confirm the company's ESIC eligibility, providing independent advice that you’ll rely on years down the track.
Attract Startup Investors With Independent ESIC Advice
If you're looking for startup investment, knowing your company qualifies for ESIC incentives is a deal sweetener in the deal-saturated VC market. Better yet – your friends and family investors could be eligible for these tax breaks too. BlueRock’s professional advice will give you the confidence to claim ESIC investment eligibility during your pitch, and we can provide a Letter of Comfort to share with investors.
Access Startup Capital
There's plenty to consider about ESIC eligibility before you jump in.
Here are a few key questions to ask yourself prior to investing in an Early Stage Innovation Company, or pursuing investment as one.
- Is the company truly ‘early stage’?
- Does it meet the innovation test criteria?
- Are the shares new equity interests?
- Is the company widely held?
- How will you deal with sophisticated vs. unsophisticated investors?
- What are the annual thresholds?
- Will you consider employee share schemes?
- Do you qualify for the incentives as a founder?
- What is the maximum eligible investment and holding?
- Is the investor an affiliate?
- Do I need to be an Australian resident?
- What are the rules for trusts and super funds?
- What documentation do I need to make and keep?
- Can I cash out or carry forward the tax offset?
Whether you are a company or an investor, BlueRock’s ESIC advisors can unlock these generous tax incentives for you. Learn more about ESIC eligibility and read our ESIC FAQ's at our Knowledgebase .
