Latest News

The government is currently preparing to release the pledged Innovation Statement, which will include more than 30 measures to boost the new economy. The statement, expected to be released on the 9^th December, is anticipated to include changes to the R&D Tax Incentive. In specific, the incentive is predicted to overhaul the incentive payment to foster innovation and promote collaboration between industry and the university sector.

However, is the Australian government placing academic research before considering critical industry insights? According to BDO, the Innovation Statement is due prior to the finalisation of the R&D Tax Incentive registrant’s survey.  The industry survey is part of the larger ‘Re:think Tax White Paper’ process and launched only just this month.

In relation to this, Nicola Purser, BDO research and development partner, believes that this is counterproductive to the spirit of innovation and the absence of commercial insights is incredibly inept. Purser notes, “It is disconcerting that the Australian Government is planning to announce its ‘revamp’ of the R&D Tax Incentive prior to finalising this survey and gathering the insights from business… In terms of specific measures, I would urge the Australian Government to consider more carefully the critical factors of expediency and promptness in commercial R&D, factors often misunderstood by academia and the public sector.”

Nonetheless, only the future will tell what lies ahead in the revamp of the R&D Tax Incentive. However in the meantime, as the incentive currently stands, businesses can gain back significant tax credits on investments they have made. Moreover, AusGrant and our team of specialist advisors will be able to assist you with any possible impacts the new R&D Tax Incentive may have. Contact us today to find out more about the R&D Tax Incentive and if your business qualifies.

Australia, aside from beautiful sweeping planes and a romanticised title as a ‘sunburnt country’, the nation is also shaping up to be an ideal environment for conducting research.  In fact, according to The Sustainable Tourism Cooperative Research Centre, Australia’s R&D spending has increased about fourfold over the past three decades. This detail, coupled with the government’s mission to increase innovation in Australia, is creating a positive outlook for the future of research in Australia.  Thus, with this in mind, foreign companies who want to undertake research in Australia may be wondering what incentives are available to them.

As we’ve mentioned previously, the R&D Tax Incentive offers companies a heavy cash refund of up to 43.5 cents in the dollar for eligible activities for Australian firms. However, in 2011 when the Australian government changed the R&D Tax Concession to the R&D Tax Incentive, the legislation expanded and the 43.5 cent ‘cash back’ benefit became available to some foreign companies who undertake R&D in Australia.  Hence, prompting the question, could your foreign firm claim the R&D tax offset in Australia? We’ve looked at three common questions you may have.

What’s its value?

The quantity that a foreign entity can claim through the R&D Tax Incentive is governed by the turnover of the company and if it has documented a profit or loss in the financial year in which it claims. The benefits array from a tax reduction of 10 cents for every dollar spent on R&D for profitable companies who turn over more than $20 million, to a cash refund of 43.5 cents in every dollar spent on R&D for companies in loss who turnover less than $20 million. The subsequent information offers a more precise summary:

Example 1:

• An Australian subsidiary company, (Company K) may be eligible for the R&D tax incentive, where:
• Company K, is an Australian company wholly owned by Company J and qualifies as an R&D entity;
• its parent company (Company J) is a foreign resident incorporated under foreign law and is a incorporated in a country that has a double tax agreement with Australia;
• Company J controls Company K;
• Company K and J and any other companies that two companies are associated with, have a collective aggregated turnover of less that AU$20 million;
• Under an agreement, Company K agrees to undertake R&D activities in its Australian office solely for the benefit of Company J;
• In the agreement, Company J does not own any Intellectual Property (IP) generated out of Company K but is legally entitled to all IP arising from the R&D activities;
• Company K incurs $100,000 in R&D expenditure for the 2017 Financial Year;
• The R&D activities are being conducted solely for Company J;
• The consideration between the two companies is at arm’s length and will be paid even if the R&D is not successful.

Requirements for setting up an Australian Company?

Foreign companies will need to set up an Australian company, and expect the following:

• Costs to setup the company to not exceed AU$2,000 to incorporate an eligible Australian entity in order to claim the R&D Tax incentive.
• Company incorporation within Australia can take between  2-3 weeks.
• Foreign entities will require the availability of an Australian resident director
• The Australian Financial year runs from 1 July to the 30 June, however foreign entities can submit an application to the ATO for a substitute financial year to align with their parent company’s timeframes.

How do I claim my expenditure?

• Eligible Australian subsidiaries will need to register their activities with AusIndustry no later than 10 months after the Australian companies year end.
• R&D expenditure is claimed through the lodgement of an R&D Tax Incentive claim as part of their annual income tax return.

AusGrant works closely with Swanson Reed on this specialist field. Both organisation work together to  assist foreign organisations to determine eligibility and assist in making a claim for R&D tax incentives in Australia. Contact us today to find out more information or if you are eligible.

The notion of ‘research and development’ is often erroneously believed to be only reserved for larger companies or those draped in white coats, yielding test tubes or microscopes. However, previous data analysis has found that small and medium (SMEs) and large firms had similar levels of variation of R&D expenditure. With Turnbull’s rise to the role of Prime Minister, the term ‘innovation’ has become shorthand for all that encompasses future business in Australia.

With this in mind, when it comes to government incentives for smaller and start-up companies, you can’t undervalue the worth of the R&D Tax Incentive for a developing business.

The Research and Development (R&D) Tax Incentive is one route that is obtainable for start-ups and offers companies up to 43.5 cents back for every eligible dollar – even in cases where start-up firms aren’t yet paying tax.

Presently, for business owners who have not applied for the R&D Tax Incentive before, it is a directed, substantial 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.

In summary,

• Companies may obtain a 43.5% refundable tax offset –  if their aggregated turnover is less than $20 million.
• For aggregated turnover more than $20 million, a 38.5% non-refundable offset can be claimed for notional deductions incurred on eligible activities.
• You must register with AusIndustry prior to lodging your company income tax return and within 10 months of your company’s income year, i.e. 30 April 2016 for a 30 June 2015 income year end.
• It is open to firms in all sectors that are undertaking eligible R&D.
• A company must have notional R&D deductions for an income year of at least $20,000 in order to claim a R&D Tax offset.

For more information about the R&D Tax Incentive contact AusGrant today to find out if you qualify or with any questions you may have.

If you are just in the preliminary stages of a business you may not be acquainted with the Research and Development (R&D) Tax Incentive scheme obtainable from the Australian government. The incentive helps businesses by offsetting some of the costs of performing R&D. Many companies are not aware of what institutes as research and development, consequently missing out on a significant cash injection for their business. We’ve delved into 4 common questions below to provide you with more information on the R&D Tax Incentive:

1. What is the R&D Tax Incentive?

If you’re conducting research in Australia, then the R&D Tax Incentive is one of the most efficient forms of support. Under the scheme, the government provides companies with up to 43.5 cents back for every eligible dollar. The research doesn’t have to involve creating vaccines or launching rockets, but rather, any firm who is developing or improving products, processes, or software may be eligible.

The R&D Tax Incentive currently has two core components:

• 43.5% refundable tax offset for eligible entities with a turnover of less than $20 million per annum provided they are not controlled by income tax exempt entities.
•  Non-refundable 38.5% tax offset for all other eligible entities. Unused non-refundable offset amounts may be able to be carried forward to future income years.

2. Do I need to pay tax or myself a salary to get the incentive?

You don’t need to have paid tax to get the incentive. Several small businesses can receive the benefit in a cash payment.

However, to claim expenditure under the incentive, you must incur the expense in your company accounts. If you are an owner of the business, salary needs to be paid within the year.

3. Can I claim R&D conducted overseas?

Companies may be able to claim overseas activities, but this is usually reserved to aid companies that can demonstrate they could not have conducted the R&D locally.  In addition, the deadline for these applications is different – firms must apply within the same financial year as the activities were undertaken.

4. Is my project eligible to submit an R&D application?

R&D projects typically encompass a set of activities with start and finish dates, commenced to produce a specific piece of new knowledge. Under the R&D Tax Incentive scheme, eligibility is determined on an activity foundation rather than on a project foundation. Eligible activities fall into two classes, core R&D activities and supporting R&D activities, both of which can be claimed.

Want to know more? Contact our R&D tax specialists today to find out if your activities are eligible.

Last week, Australia Post announced that it will be investing $20 million in emerging e-commerce business and will be co-locating its ‘venture accelerator program’ within the University of Melbourne’s Melbourne Accelerator programme (MAP). The company also revealed that it could invest as much as $100 million in the next few years in emerging local e-commerce businesses as a measure to fuel innovation in digital services for its customers.

The partnership with MAP and the investment fund are part of a wider program which is directed at accelerating e-commerce innovation and aiding small businesses across Australia. In relation to this, University of Melbourne vice-chancellor and professor Glyn Davis said, “harnessing the current mood around Australia’s innovation agenda is important, and this investment will go a long way to ensuring that start-up cultures like those at MAP continue to have a prominent role at the university.” This non-exclusive partnership is predicted to be the first of many around Australia.

In addition to this, Ahmed Fahour, Managing Director and Group CEO of Australia Post, believes innovation is at the forefront of Australia Post’s transformation into a leading e-commerce business.

Already Australia Post increased innovative activities – last week it was reported that Australia Post is conducting research and development in trialing the use of drones for package deliveries as early as next year. The drones, which will cost $10,000 each, will allow parcels to be delivered right on people’s patios.

Indeed, Australia Post’s investments in innovation will no doubt add a competitive edge in an increasingly technological market. There is no denying that innovation is one of the most exciting ways to move a country and a company forward. But for that to happen, a company must create an environment conducive to innovative activities. A way for companies to do this is by undertaking research and development to drive new ideas, products, processes or software. Whether you are trialing drone delivery or researching a new product, you may be eligible for tax credits. Contact us today to find out if you qualify for the R&D Tax Incentive.

The Lucky Country by Donald Horne, which came out in 1964, has gone on to become a cult classic, as well as trademarking Australia with a nickname. However, Professor Iann Chubb believes we need a change of titles, shifting from the infamous “lucky country” to being recognised as the “entrepreneurial country”.

Professor Chubb, who won the Lifetime Achievement Award, is a researcher, university leader, influential policymaker and a powerful advocate to government and the Australian public. This week, he has bought Australia’s entrepreneur problems to light in a report titled, Boosting High-Impact Entrepreneurship in Australia. In the report he notes that the entrepreneurship activities in most Australian universities are lacking in maturity by global standards. As a response, the report suggested that incentives linked to funding would encourage universities to recognise academic staff for engagement in student entrepreneurship activities.

In addition, the report reveals that few universities have frameworks to support entrepreneurial students in place in Australia, whilst it is a very popular model overseas. In Australia, if staff are engaged with student entrepreneurship, it is generally unfunded and considered ‘labour of love’. However, in the United Kingdom, universities are assessed on not only the quality of their research, but also the impact this has on students and the economy.  The report suggests applying a mix of programs in universities. It says entrepreneurs with track records should be recruited as role models and guest lecturers. Classroom-based learning should be supported with experiential programs such as incubators, accelerators, internships and overseas placements.

As  can be seen from the above, Chubb believes that entrepreneurism needs to be taught at all levels of educations –  in schools, universities, and throughout an individual’s working life. In the report’s foreword he writes that entrepreneurship, “is inseparable from education — not independent of it…we need to shift our mindsets from a willingness to muddle along to a determination to make our luck.” What do you think, can entrepreneurism be taught and will this change Australia’s reputation to being more innovative?

The Turnbull government hasn’t been silent about their desire to shift Australia to be more innovative, mainly by endorsing start-ups and creating a tech community. Wyatt Roy, Assistant Minister for Innovation, noted earlier this 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.

But why start-ups and why are they good for our economy? We’ve gone through five key positive effects that start-ups can have on the Australian market below.

1) The Future of Business

There is denying our economy is shifting to being more technologically-driven. As we mentioned in yesterday’s article, the Internet of Things (IoT), is completely changing the way we interact with each other. Moreover, in the famous words of Google, “start-ups fuel economic growth and increase innovation”. Indeed, start-ups could help Australia adapt to a digital change.

2) Supporting Local Economies

Start-ups, or those who start them, are locals and they generally hire local freelancers. They often become involved in communities and partake in industry events, as community engagement is vital for the success of their business. Thus, these combined efforts supply money, resources and vibrancy back into the local community.

3) A varied market

The fruit of startups are born out ideas that are inspired by gaps in the market. Moreover, due to the increased competition between small businesses, start-ups are required to develop their products, faster, more efficiently, and cheaper. As a result, consumers are presented with reasonably priced, quick solutions to common problems.

4) Developing Well-Rounded Individuals

Working for a start-up means having to learn to do a number of different tasks that are necessary for the development of a successful business. In essence, the scope of a start-up employee’s work is far greater than an employee working in a single department for a large company, and thus, they often gain a more varied work experience. From marketing to accounting, start-up employees often wear many hats.

5) Providing Opportunities in Tough Job Market

Start-ups often employ young individuals in a range of industries or offer an in-depth experience for interns. In an unresponsive job market, start-ups can definitely assist in job creation.

Overall, start-ups can have a huge impact on the economy and can help create a more vibrant market in Australia. If you are start-up in Australia and conducting research and development, you may eligible for Research and Development Tax Credits – contact one of our specialists today to find out if you qualify.

This week throughout Sydney, 150 speakers and 60 events across 22 venues will take place to showcase and endorse Australian start-ups. There are ten different streams, majority around technology, including financial technology, health technology, and to the delight of many, the Internet of Things.

If you hadn’t heard of the ‘Internet of Things’, or IoT for short, it is basically a concept of connecting any device with an on and off switch to the Internet. From wearable technology to smart cars and homes, the IoT is a giant network of connected “things”. It is the relationship between people to people, people to things, and things to things.

Although Australia did not partake in the PC wave during the 80’s and 90’s, initiatives such as Start-Up Week and the Turnbull governments innovation agenda, Australia has the opportunity to embrace and impact the IoT wave. Moreover, The IoT movement is rumoured to be larger than the smartphone, tablet, and PC markets combined.

In relation to this, large corporations in Australia have started realising the potential of IoT and are acting on it. However, in order to develop and improve new products, devices, processes and ways to connect to ‘things’, a company should consider investing in research and development to drive innovation.  In fact, several companies may already be partaking in R&D activities and may not know that the Australian government seeks to support them by encouraging innovation through the Research and Development Tax Incentive. Contact Ausgrant today to see how the R&D Tax Incentive can help you.

It’s battle of the plastics, as Australia’s NSW government reveals plans to create a ‘Silicon Harbour’ innovation centre on Sydney’s infamous harbour. A desolate power station in the Sydney’s inner-west will be transformed into a technological hub, joining multinational tech firms with the startup community.

Premier Mike Baird has been put in change of the transformation and has large aspirations for the space. “This plan showcases the NSW government’s ambition for The Bays Precinct to drive an internationally competitive economy by creating destinations on Sydney Harbour that will generate space for hi-tech jobs and sustainable homes of the future,” Mr Baird said. “The plan will unlock The Bays Precinct’s enormous ­potential.”

In addition, Planning Minister Rob Stokes reveals a five kilometre long promenade, which will link each different site, and will allow the public to utilise areas that have been untouched for decades. Also embodied in the plan is a waterfront fresh-food market and an outdoor plaza with dining, entertaining areas and pop-up events.

Certainly, the elaborate plans predicted so far do sound like a step in the right direction for Australia’s innovation agenda. However, is creating a technology hub enough? As mentioned in a previous post, a recent NAB Innovation Report Summary revealed just 13% of all firms rate Australia as “highly innovative”.

Correspondingly, one way of further building an innovation society is highlighting the importance of research and development (R&D). Through the R&D Tax Incentive, thousands of Australian companies are given further incentives to innovate. Last year alone, the R&D Tax Incentive provided 13,000 companies with tax support. Companies who are including the R&D Tax Incentive in their tax strategy are reducing their taxes, freeing up their capital, and increasing their competitive edge in an competitive economy. Contact us today to see if you are eligible to claim the R&D Tax Relief.

On the 15th of October 2015, The ATO has alerted taxpayers against accessing the R&D tax incentive for ineligible broadacre farming activities.

According to TA 2015/3, the ATO and AusIndustry are revising provisions where chief producers engaged in broadacre farming are claiming the R&D Tax Incentive for the cost of fertilisers and soil improvers where a significant part (or all) of the expenditure that is acquired relates to “business as usual” farming activities and not to R&D activities.

Hence, The ATO and AusIndustry have communicated to individuals who may have entered into this type of arrangement. Furthermore, as a result of these findings, they will monitor registrations for undertakings that are analogous to those described in TA 2015/3 and will conduct compliance activities where needed.

In Australia, broadacre is land suitable for farms practicing large-scale crop operations. The key crop segments in this category are as follows, canola seeds, sunflowers seeds, wheat, barley, oats, triticale, sorghum, maize, and millets. Therefore, if you think you may be involved in these activities and  want to know how it will affect your claims under the R&D tax incentive, contact us today for more information.