An Australian-incorporated company will generally qualify as an Early Stage Innovation Company (ESIC) if it is in the early stage of its development, the early stage limb, and where either of the following tests are satisfied:

  • Principles-based innovation test; or
  • 100-point innovation test.

To qualify under the principles-based innovation test, the company must be able to demonstrate that it is developing new or significantly improved innovations, with the purpose of commercialisation to generate an economic return.

To qualify under the 100-point innovation test, the company must obtain at least 100 points by meeting certain objective innovation criteria.

The Australian Taxation Office (ATO) have indicated that it may be simpler for a company to qualify as an ESIC by satisfying the 100-point innovation test, as opposed to the principles-based innovation test.