The R&D Tax Incentive
Key points in this article
- The R&D Tax Incentive is a government run program to reduce risk for small businesses undertaking R&D
- A lot of Australian businesses don’t realise they are doing R&D
- Are you eligible? Follow the steps to find out
What is the R&D Tax Incentive?
By Mark O’Neill
Product Owner, PwC’s Nifty R&D
The Australian government wants to provide a safety buffer for small businesses taking a financial risk in trying to create something new or improve something existing.
The program helps a wide range of businesses across different industries including manufacturing, agriculture, retail, professional services, fashion, science, online or technology.
A surprising amount of businesses in Australia are doing R&D, they just don’t realise it.
Take some time to understand exactly what the R&D Tax Incentive is
First, check that you are doing R&D
It’s generally accepted that you’re doing research and development if you’re experimenting with different solutions to solve a previously unsolved problem.
Examples vary from industry to industry, but may include:
- Tech start-ups building new web or mobile applications
- Fashion designers designing a new material
- Farmers improving their automated irrigation systems
- A new coffee blend which combines several beans and uses a multi-stage roast process to achieve specific pH and a different taste profile
- Vegan cakes (i.e. animal and dairy free) which maintain their taste profile after freezing and are capable of being manufactured at scale
- A process that combines several systems to automate manufacturing steps resulting in increased throughput
- Increasing the capacity, efficiency and diversity of food manufacturers production lines by trialling new production layouts and machinery
- Software application to enable customers to determine the required type of light fittings based on room dimensions and desired lighting level
Automating responses to customer reviews and product ratings across online channels
Is your business actually researching and developing?
How do I submit a claim?
The program is run by both AusIndustry (on behalf of Innovation Australia) and the Australian Taxation Office.
In order to submit a claim you need to provide two documents, an application form that goes to AusIndustry and a Tax Incentive Schedule (TIS) that goes to the ATO.
You can start submitting claims as soon as the financial year ends (i.e., July 1st of the next year) through to lodgement deadline at midnight on April 30th (i.e., you can still claim now for the year ended 30 July 2014).
How long does it take to get my money?
Typically the Australian Taxation Office (ATO) will take between 3 and 6 weeks to process a claim after it is lodged. Keep in mind that the ATO will have a bit of a backlog as we get closer to the April lodgement deadline.
How do I know if I am eligible?
You’re likely to qualify if your business is:
- incorporated as a company,
- a for-profit entity,
- registered in Australia,
- spent over twenty thousand dollars on eligible expenses in the last financial year, and
- you undertook a project to improve an existing or build a new product, process or service.