Early Stage Innovation Company Status Helps Raise Funds
Business Advisory Services Updates
Early Stage Innovation Company status is not well-known and this has probably meant that many directors of young companies were unaware of the special category of companies that the government established to encourage investors to consider investment in companies which have developed new products, processes, services, management or marketing methodologies.
To be eligible the company must be under 3 years of age, have turnover of less than $200,000 and expenditure of less than $1M, in the previous 12 months.
To be eligible a company is required to pass 1 of 2 tests.
If the company passes the tests, investors who invest in an ESIC can obtain taxation benefits:
- A tax rebate of 20% of the investment in the company, up to a maximum of $200,000 for a sophisticated investor and $10,000 for a retail investor.
- If the original investor retains ownership of the shares for longer than 12 months the investor is able to avoid capital gains tax when the shares are sold.
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