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With the Turnbull Government pledging for an innovative society, the importance of research and development (R&D) has been increasingly discussed in the local community. In particular, the R&D tax incentive and its lucrative benefits have become progressively public knowledge. Despite this, however, there remains much confusion about the incentive.

Hence, in light of this, we look at the record-keeping that is needed if a company wishes to apply for the R&D tax incentive. Maintaining these documents is beneficial to companies as it will reduce the expenditure that may be associated with a compliance review. It also supports the company to conduct its work and re-visit ideas, processes and solutions in the future. Moreover, if the company wishes to commercialise its work, potential investors will anticipate having access to a comprehensive range of records.

What records should be maintained?

Companies must keep sufficient records to validate:

• They conducted eligible research and development activities
• They experienced eligible expenditure in relation to those activities
• Their R&D activities and expenditure met all other legislative requirements under the scheme

Record keeping for tax purposes:

A company’s business records must be sufficient to verify:

• The amount of expenditure incurred on R&D activities
• The nature of the R&D activities
• The relationship between the expenditure and the R&D activities. It is the company’s responsibility to satisfy the ATO of the accuracy of the method used to allocate and calculate the proportion of expenditure on core R&D activities and supporting R&D activities.

If the R&D activity is undertaken by a contractor, documents involving to the contract, the R&D activities and the project report and invoices should contain:

• The date the R&D activities are undertaken
• Sufficient detail to ascertain the amount of expenditure on the R&D activities
• A description of the activities performed by the contractor to link the fee with a particular R&D activity. Under tax law, records must generally be kept for a minimum of five years.

As can be seen from above, record-keeping is vital for companies if they are wishing to claim a tax incentive. Indeed, the details in the incentive means that there can be confusion when making a tax claim based on R&D activities. Hence, how can companies avoid errors when making a claim?

One way of escaping error is by engaging in a reputable R&D Tax Specialist, such as Ausgrant.  Our specialists will be able to support any questions you may have. If you would like any more information on the R&D Tax Credit, please contact us today to find out more.

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.

The adequately deemed ‘silly season’ has officially come to a close, marking the start of a new year, new resolutions, new ideas, and new ways. Although these are often concerned with a new fitness regime, new language or the phasing out a bad habit in our personal lives – our corporate goals shouldn’t be left off the resolutions agenda either.

Whether you believe in resolutions or not, making a list of action can help you achieve your goals in 2016. Certainly, the New Year means new opportunities—for networking, meeting clients, expansion, and growth. It is a great time of year to evaluate the old, and consider the new. For instance, the inclusion of ‘innovation’ in a company’s goals for 2016 is a great place to start.   Due to Turnbull’s Innovation Statement being released last month, there is no denying the fact that the term ‘innovation’ has become politically fashionable. However, how can companies translate this buzzword into a reality for their company?

One perceptible way of growing innovation in your company is by increasing research and development (R&D) activities. Besides supporting the creation of new products, processes, and software, R&D can increase profits and knowledge for a company. Consequently increasing cash flow and improving productivity. Moreover, companies can benefit further by utilising the governments R&D Tax Incentive.

The research and development (R&D) incentive is intended to boost innovation in firms 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. 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.

Hence, in 2016, companies wishing to refresh, reinvent and re-energise their companies should highly consider investing in innovation. As mentioned above, R&D activities are one great way of driving innovation. Posing the question, what new opportunities could R&D create for you this year?

AusGrant is one of Australia’s leading grant consultancy services, providing specialist services relating to grant submissions and R&D tax agent services.

With a nickname of ‘The Start-Up Nation’ and a thriving tech-scene, there is no denying that Australia could learn a thing or two from the country of Israel. Wyatt Roy, Assistant Minister for Innovation, noted last month how Israel transformed itself into a digital economy with more start-ups per capita than any other country. Indeed, the government hopes to do the same with Australia with the aim to position ourselves as a strong competitor in the global economy.

In light of this, the Innovation Statement that was released last week touted Israel as an innovation mecca, with Tel Aviv being positioned at the equivalent to Silicon Valley. As announced in the $1.1 billion Innovation Statement, or “ideas boom”, Australia is planning to take on a more innovative and international focus. Innovation Minister Christopher Pyne said there is $36 million assigned towards forming five landing pads around the world to help Australian tech companies get a base in foreign markets.

The pads will be a physical hub for Australians who are considering undertaking entrepreneurial activity in the overseas location. Moreover, the landing pads will allow access to venture capital funds, facilities and contacts. They are proposed to act as a home away from home for Australians who want to do business overseas. This week it was announced that the first pad to be set up will be in Israel’s Tel Aviv.

Israel, similar to Australia, comes from an economy primarily based on agriculture and traditional manufacturing. However, it is their rise to a technologically advanced nation that has acquired the Australian government’s attention. In fact, the relatively small country has the third highest number of companies listed on the Nasdaq stock exchange in New York. In relation to the landing pad, Pyne noted that there is a huge potential for Australian companies to take advantage of Israel’s knowledge-base and technology advanced economy.

Are you interested in undertaking entrepreneurial or innovative activities? If so, participating in research and development is one way to expedite innovation in your firm and can allow business leaders to discover creative products, processes or solutions. The government provides a generous Research and Development (R&D) Tax Incentive which is highly effective in aiding rising companies in promising future industries. In particular, the R&D Tax Incentive offers companies a heavy cash refund of up to 43.5 cents in the dollar for eligible activities. Contact AusGrant today to find out if you’re eligible for generous tax benefits.

Quality Australian livestock – it is one of our national icons that is quintessentially Australian, along with vegemite, football, and pineapple on burgers. In fact, last year alone, Australian livestock products were shipped to 150 different countries.

Indeed, Australia is competitive in producing quality meat, which according to Dr Barnard, the General Manager of Trade and Economic Services for Meat and Livestock Australia, is due to having the best practices.

However, it could come as a shock to several that activities characteristically related with agriculture and farming can qualify for the research and development (R&D) tax incentive. With developments in the food sciences and the concern of feeding an increasing population, those in the agriculture industry have the opportunity to claim and profit from the widespread tax incentive.

In fact, the R&D Tax Incentive is the biggest scheme in Australia that aids businesses participating in research and development. Over $1.8 billion is granted annually and it is not competitive – in other words, if you are eligible then you are permitted to it. The classification is deliberately comprehensive as the Government wishes to support R&D across various business and industry sectors. Thus, highlighting the fact that it’s not just about ‘white lab coat’ research, but rather, encompasses all types of research and industries.

Moreover, farming and agriculture have a surfeit of prospects for experimentation, such as disease control, irrigation, new product development, more proficient or economical harvesting techniques and soil development.

Overall, numerous businesses are missing out on the government incentive for R&D benefits purely because they did not know whether or not they were eligible for the incentive. In light of this, providing guidance to you on what undertakings are eligible, and facilitating you to comprehend the business benefits and key features of the offset, is what AusGrant do best. Contact us today to find out more or if you could be eligible for generous tax benefits.

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.

On Monday the Turnbull government released the much anticipated Innovation Statement. The agenda involves 24 measures and is pitched to be a prototype for revolutionising Australia into a society that is innovative. However, as we mentioned yesterday, despite the anticipations of many, the R&D Tax Incentive has no changes mentioned in the plan. Nonetheless, the Innovation Statement did announce a new independent body, Innovation Science Australia (ISA), who is expected to conduct a review in 2016 of the R&D scheme.

In the meantime, entrepreneurs have highlighted the benefits R&D has on innovation and how it is a vital tool for start-ups. James Wakefield, co-founder of InStitchu.com.au, articulated to the Business Insider that “the R&D grants and incentives as they stand in Australia have made it worthwhile committing to growing an Australian-based business… The Australian government is already is extremely supportive and the current R&D model highlights the importance that they are placing on growth and innovation remaining in Australia.”

In addition, Adrian Di Marco, executive chairman and founder of TechnologyOne stated that, “start-ups need to recognise the importance of ongoing R&D investments, and need to continuously improve and evolve their products to meet market demands. Through R&D, start-ups can continue to reinvent themselves and their business to keep pace with changing technologies and market developments. At TechnologyOne, our significant investment of 20 per cent of revenue back into R&D ensures we are encouraging local and sustainable innovation.”

Certainly, as the above reveals, there is no denying that the R&D tax concession is one of the largest single support policies for innovation. Despite there being a possible changes to the scheme when ISA becomes effective in July 2016, in the interim, the R&D Tax Incentive remains the same and offers valuable support to companies. Thus, businesses should still participate in R&D business activities as per normal and can still obtain generous tax benefits from their R&D investments. If you think your company may be eligible,  please contact AusGrant to learn more about the R&D scheme.

The ‘ideas boom’, aptly named by Turnbull,  has been pledged to transform Australia into an innovative society with the convenient assistance of $1.1 billion federal budget. The key piece of agenda that is fuelling this ‘boom’ is the Innovation Statement, which was released yesterday in Australia. The statement outlines 24 initiatives across 11 government sectors and will cost the government $1.1 billion over the next four years.

The Innovation Statement report includes tax incentives which could provide a huge boost for our entrepreneurial ecosystem and could drive cultural change. Notable policy changes include the fact that investors in start-ups will be able to claim tax rebates of up to $200,000 a year as well as capital gain tax exemptions. Aside from tax breaks for investments, the federal government will add almost $3 billion into research facilities and science programs over the next 10 years. Moreover, the Turnbull government will offer a 20 per cent income tax rebate for retail investors (capped at $200,000 per investor per year) in order to lure everyday investors away from real estate and shares.

In relation to the R&D Tax Incentive, the Innovation Statement included no changes to the current scheme. However, it is important to note that in 2016 Innovation Australia will be replaced with Innovation and Science Australia (ISA), which will be the new body advising the Government on innovation policy. Hence, next year there may be proposed changes to the R&D tax incentive under this body. Furthermore, there is currently two surveys underway which are reviewing the R&D incentive – one by Tax White Paper and one conducted by the Centre for International Economics.However, the findings of these have not yet been finalised yet and they are suspected to be released in 2016. Hence, the results from these may impact how the government pursues the R&D Tax Incentive in 2016-2017.

Nonetheless, since the R&D Tax Incentive currently remains untouched, businesses are encouraged to engage in R&D activities as per usual. Furthermore, if you have conducted R&D in your business, you may be eligible for substantial tax savings. Contact AusGrant today to talk to a specialised R&D Tax consultant and find out if you could benefit from the scheme.

Last Friday the government released its 2015 Australian Industry Report which overviewed economic activity across industries. A chief segment of the report was an analysis of Australian and international studies regarding the impact of government-funded R&D tax incentives.

The examination arises in advance of the Turnbull Government producing its Innovation Statement today, which is predicted to include changes to the R&D Tax Incentive.

The report highlights the benefits of R&D and how it can be used as a main vehicle for innovation and firm competitiveness. In specific, the report notes, “New or significantly improved products and services can be sources of increased profits for innovating firms, while process innovation can lead to productivity and efficiency improvements. R&D therefore supports the underlying firm objective of profit maximisation while enabling firms to increase their market shares.”

Furthermore, according to the breakdown contained in the report, “…R&D is not persistent enough to be sustained over the long term without strong turnover or external stimulants such as spill overs and tax incentives, and it would rapidly fall to zero if not supported by other means such as strong sales or government assistance.”

Whether the Innovation Statement brings changes to the R&D Tax Incentive or not, Ausgrant can assist you in understanding more about the R&D tax scheme and if your company is eligible. Contact us today to talk to an R&D Tax specialists and find out more.

As Australia embarks on a more innovative journey, one that Turnbull has touted to be more digital, the role of software may become more central to businesses in the private sector. In regards to the Research and Development (R&D) Tax Incentive, claiming software development may be eligible depending on the firm’s activities.

Research and development for software entails that as portion of your development, you face technical challenges or complications that could not be simply deciphered with standard research. Hence, to overcome these issues or to generate the functionality that you need, you commence an “experimental process” to resolve the issue. An “experimental process” in software is characteristically where you have tried diverse methods, unalike algorithms, dissimilar structures or systems to crack the problem.

In relation to this, the incentive rewards R&D undertakings that seek to elucidate distinct technical difficulties. However, with concern to software, there is supplementary eligibility criteria around anticipated usage:

• If your aim is to retail the software you create, it’s eligible.
• If your aim is to progress the internal administration of your business, it’s generally not.
• If your purpose is to cultivate a new system that exceeds previously accessible functionality – and it is unique to the market – it’s likely to qualify.
• If your aim is build a glossy website from existing tools, it won’t.
• However, if your bespoke website or application is business-to-business facilitated and increased exclusive functionality – aspects of its development could indeed qualify.
• Lastly, where your distinctive software application is part of the process used to develop or manufacture your product, the incentive may apply.

Thus, there is indeed a significant amount of perplexity in this area and, as a result, many companies are not aware of the extent of their eligible activities, or that they are eligible at all. AusGrant offers expertise across a broad range of industries and can assist in identifying if your research or development activities qualify. Contact us today to find out if you could achieve tax cash savings under the R&D incentive.