Early Stage Innovation Company Reports | KPMG | AU

Early Stage Innovation Company Reports due 31 July 2017

Early Stage Innovation Company Reports

Georgia King-Siem and Brendan Giles discuss ATO requirements regarding the preparation of Early Stage Innovation Company Reports.

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The Early Stage Investor Tax Incentive (ESITI) has now been up and running for just over a year. Since 1 July 2016, Early Stage Innovation Companies (ESICs) have been able to issue new equity shares to investors who hopefully qualify for the non-refundable 20 percent tax offset and Capital Gains Tax (CGT) holiday offered by the ESITI.

Where a company believes it has issued shares that qualify under the ESITI, it must file a report with the Australian Taxation Office (ATO) by 31 July 2017. For each investment that may qualify, the company must report:

  • Australian Business Number (ABN), name and address for the investor (plus the date of birth for investors that are individuals)
  • number of new shares issued to the investor
  • amount paid for the new shares
  • date the shares were issued
  • percentage of shares in the company held by the investor immediately after the shares were issued
  • whether the company qualified under the 100 point test or the principles based test and
  • whether the company has a ruling on its eligibility.

Importantly, this report is a declaration by the company that it qualified as an ESIC at the time of the reported investments – if the company does not meet the requirements, it could result in penalties or even criminal penalties.  See here for more information and those seeking to lodge a report can do so via the Business Portal or the Tax Agents Portal.

For those unsure as to whether they qualify as an ESIC or if their investment qualifies under the ESITI, it may be worth speaking to either a professional advisor or the ATO.

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