As Australia begins a more digital journey in 2016, one that Turnbull has patented as being more innovative, the role of research and development (R&D) may become pivotal to businesses in the private sector. With this in mind, when it comes to government incentives for companies you can’t undervalue the worth of the R&D Tax Incentive for developing a business.
The Research and Development (R&D) Tax Incentive offers companies up to 43.5 cents back for every eligible dollar – even in cases where small companies aren’t yet paying tax. It is a focused, significant entitlement program that may aid business owners offset some of the costs of doing R&D. The incentive’s purpose is to assist more businesses to do R&D and innovate. However, many companies aren’t certain on what exactly qualifies as “R&D”.
Essentially, if you are spending expenditure to advance existing or produce new products, services, or processes, then there is a high probability you are doing R&D. This can originate in numerous forms, such as: streamlining manufacturing process, constructing an app to deliver an enhanced customer experience to clients, or evolving a new food item with a different or rare combination of ingredients.
For a company to be able to claim the R&D Tax Incentive, the business must meet four standards. These are:
- The business is incorporated as a company
- The entity is for profit
- The company is registered in Australia
- Over $20,000 was spent by the business
If you’re still unsure about what is activities are eligible for the incentive, please refer to the list below:
Qualified expenses:
- Depreciation of R&D associated assets
- Rent, utilities and other subsidiary costs
- Equipment and software licenses
- Patents and related legals
- Travel expenses
- Salaries
- Operational expenditures
Unqualified expenses:
- Marketing or advertising costs
- Contractors outside of Australia
- Salaries for staff not doing R&D related work
- General legal fees
- General accounting fees
- Expenses from this financial year
For those interested in self-claiming the R&D tax incentive, TaxTrax is new software that helps companies lodge and submit an R&D application by themselves.
For more information about the R&D Tax Incentive or the grant submission process, contact your usual AusGrant representative.
