Business as usual for SMEs looking to invest in r and d and claim the r&d tax incentive

• So what is this R and D incentive 

it is basically a cash rebate to incentivise you for developing innovative products and services. 

It provides a rebate of between 13.5% to 41.5%

So if you spend $100,000 on developing a new product or service or innovating,
you could get back between $13,500 and $43,500 depending on your Companys' profitability.

(limited to $4m per year) 

• Are you Eligible 

If you are 

• an Australian Company
• Undertake R&D Activities in Australia 
• Spend Over $20k 

YOU COULD BE ELIGIBLE 

ps ... if you are 3 years old and your turnover is greated than $1.5m there are a whole host of other grants you can claim 

• SME's don't claim for a whole host of reasons

INCLUDING

• They dont have adequate systems to record R&D activities
• They do not know what R&D actually is (the legislation is very murky and difficult to interpret - even by the experts 
• They don't know what they don't know 

Some research indicates that at least 50% of SMES undertake R&D activities and could potentially claim this incentive - but only 1% do!

• The Risk

Funds from the budget have been allocated to crackdown on non-compliance and rorting , so you need to ensure you have your ts crossed and is dotted 

Budget 2018 Changes 

• Changes to percentages to be claimed with companies whose turnover is greater than 20m - giving more to those who spend more on r and d as a percentage of revenue .
• Caps on spend 
• Those that claim - names and amounts will be published 
• Bigger budget to be spent on compliance - so ensure you have your claim verified and auditable! 

Let me know if you want a referral to the best r and d consultants in the country! 

How do you define R & D for the R & D Tax Incentive

Core R&D Activities

Core R&D activities are experimental activities: whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that is based on 

• principles of established science; and
• proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions
• that are conducted for the purpose of generating new knowledge (including about creating new knowledge or improved materials, products, devices, processes or services).

Some types of activities are specifically excluded from being core R&D activities.

Supporting R&D Activities

A supporting activity is one that is directly related to core R&D activities or, for certain activities, has been undertaken for the dominant purpose of supporting core R&D activities. Activities that must satisfy the dominant purpose requirement are those that produce - or are directly related to producing - goods or services; or are excluded from being core R&D activities.

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