Tax Incentive for Early Stage Investors (ESIC) | Bulletpoint
Unlock Tax Breaks for Investing in Australian Startups
Get rewarded for backing innovation through the Early Stage Innovation Company (ESIC) scheme
- 20% Tax Offset – claim up to $200,000 per year
- Capital Gains Tax Exemption – no CGT for 10 years if you hold shares for 3+ years
What is the Early Stage Innovation Company (ESIC) Tax Incentive?
The ESIC tax incentive is a government scheme that gives investors in innovative Australian startups a 20% tax offset (up to $200,000/year) and a 10-year exemption from capital gains tax, provided they hold shares for at least 3 years.
What Is the Early Stage Investor Tax Incentive?
The ESIC incentive helps startups access capital by giving investors generous tax concessions. Backing innovation in Australia has never looked better. This Australian tax incentive is available to investors supporting local startups.
- 20% Non-Refundable Tax Offset – capped at $200,000/year
- Capital Gains Tax Exemption – 10-year CGT-free period if held for 3+ years
How to Qualify as an ESIC
To be eligible, a company must pass:
- The Early Stage Test
- Either the 100-Point Innovation Test or the Principles-Based Innovation Test
Early Stage Test includes:
- <$1M total expenses
- <$200K assessable income
- Unlisted
- Incorporated in last 3 years
100-Point Innovation Test
| Criteria | Points |
|---|---|
| ≥50% R&D Tax Incentive Spend | 75 |
| Accelerating Commercialisation Grant | 75 |
| ≥15% R&D Spend | 50 |
| Eligible Accelerator Program | 50 |
| Raised ≥$50K new shares | 50 |
| Standard Patent or Plant Breeder’s Right | 50 |
| Design/Innovation Patent | 25 |
| Research Collaboration | 25 |
Looking for startup investor tax benefits in Australia? This innovation test is one of two paths to qualify as an Early Stage Innovation Company (ESIC).
Do You Need an ATO Ruling?
No — an ATO ruling is optional if you’re self-assessing using either the 100-Point Test or the Principles-Based Innovation Test. But getting one can provide certainty for investors and reduce audit risk.
Example: How the Capital Gains Tax Exemption Works
John invests $4M in ESICs. While the 20% offset equals $800K, the cap means he can only claim $200K. He uses $50K to reduce tax this year, and carries $150K forward. If held 3+ years, the CGT exemption applies.
Get Help With Your ClaimRelated Grant: Accelerating Commercialisation
Startups that qualify as ESICs often also meet the criteria for the Accelerating Commercialisation Grant – offering up to $1M in matched funding. Learn more and maximise your funding opportunities.
Still Unsure If You Qualify?
Download the free Principles-Based Innovation Test or book a call — and we’ll walk you through it.