Certainly, the phrase “innovation” has become politically fashionable this week due to the release of Malcom Turnbull’s Innovation Statement. The agenda has injected confidence in small companies (SME) across Australia as the nation seeks to be more digitally steered. However, many small or young firms may be unaware that there are already measures they can be taking to maximise their cash flow. The research and development (R&D) incentive is intended to boost innovation and improve business processes – and can also provide companies with generous tax benefits.
Although, there is a common misunderstanding that the R&D tax incentive only relates to technology or research focused companies, such as the enormous pharmaceuticals companies. Nonetheless, any business which is innovative or undertaking eligible activities may qualify.
In fact, organisations that do not seem like they would fit the “typical research type” may be able to claim – including retailers, wholesalers, healthcare organisations, renewable energy providers, food manufacturers and many more.
Furthermore, micro businesses that participate in research and development are much more inclined to have increased development in sales and profitability than firms of the equal size that don’t undertake research activities.
However, when it comes to actually making a claim there is often a great deal of ambiguity about how to make a valid R&D claim. The perceived complexity could be another reason why many small businesses are not taking full advantage of the scheme. Yet, it is important to note that the R&D Tax Incentive is one of the most effective methods of support for research in Australia and provides companies with up to 43.5 cents back for every eligible dollar – even in cases where small or young firms aren’t yet paying tax.
If you think your company may be eligible for the incentive, have a chat to our R&D tax specialists who will be able to answer any further questions or help you make your claim. The earlier you get the ball running and submit your application, the sooner your small company will receive their refund.
