Latest News

One of the most consistent findings in macroeconomics is that innovation drives economic growth.  The fundamental role that innovation plays in compelling economic growth is renowned due to the infamous work of Robert Solow (Nobel Prize Laureate in Economics in 1987). In his seminal 1957 paper, Technical Change and the Aggregate Production Function, one of the core findings of his work (and of its subsequent developments) is that a huge portion of economic growth is driven by technological advance. Indeed, in the 21st Century the economy is becoming more digitally focused and technology is reshaping established fields of medicine, manufacturing, energy and business services.

Recently in the news, the Australian government has voiced a desire to shift the Australian culture to be more entrepreneurial in our increasingly technological economy. One key agenda that has been focused on is the funding of start-ups and crowdfunding to boost innovation. However, is this solely where the government should be concentrating its efforts?

In particular, one topic that should be considered is boosting innovation in established businesses. Cochlear, the $4.8 billion world leader in hearing implants, is a prime example of an Australian innovation that has successfully transitioned to a global advanced manufacturing success story and resulted in long-term economic growth. Recently, Rio Tinto has been harnessing innovation through implementing driver-less mining trucks. Posing the question, how can Australia continue to produce new similar success stories whilst ensuring that companies like Cochlear continue to be Australian based?

For instance, one way to upsurge innovation with established businesses would be for the government to increase incentives in R&D. Rick Holliday-Smith,  Cochlear chairman, states his opinion that, “”we would recommend the government to reward appropriately defined innovative companies for their incremental R&D spend by increasing the concession for additional R&D expenditure.” Certainly, introducing further incentives and lifting the cap on research and development concessions would most likely encourage companies to continue to keep their innovative activities in Australia.

Nevertheless, it is imperative that Australia acknowledges the importance of R&D on a country’s competitive edge and long-term growth. Cross-country evaluations show that growths in private, public and foreign R&D all contribute to increases in multi-factor productivity. Furthermore, previous empirical research confirms that R&D does increase long-term growth (OECD, 2001). Thus,  for leaders, companies, and Australia as a entity, to remain competitive in a rapidly intensifying digital market, they should invest in research and development to drive innovation.

If you have invested in R&D within your company, you can still receive generous incentives from the government. Have a chat with us today to find out if your eligible.

References:

OECD (2001), The New Economy: Beyond the Hype – The OECD Growth Project.

In the wise words of Ellen DeGeneres, “when you take risks you learn that there will be times when you succeed and there will be times when you fail, and both are equally important.” In Australia, one of the biggest barriers to research is the stigma of failure. However, Australia needs a shift of mind and to embrace failure. This is particularly relevant for start-up entrepreneurs, who are confronted with the frank reality that new businesses are particularly delicate and can fail overnight.

Success disguises our mistakes, whereas failure gives us the chance to reflect and improve next time. Starting with the media, projects that failed should be discussed so that we can learn from them, instead of focusing exclusively on what worked. Moreover, Australia should take notes from our American counterparts, who have created ventures to push failure as a badge of honour. FailCon is one of these endeavours, promoted as a one-day conference for entrepreneurs, investors, developers, researchers and designers, it blatantly celebrates failure and encourages attendees to exchange stories of failure.

Early this month, Wyatt Roy, the Assistant Minister for Innovation, cited that changing the culture in Australia was vital to encourage a positive attitude to entrepreneurialism. “Changing culture is the biggest challenge we face,” he said. “It is probably the most important thing and it is the hardest thing for us to do.” He further added, ““We want to see a big cultural shift which embraces the entrepreneurial spirit in our collective psyche. We need to see greater co-operation between government, research, science and the private sector. We need to grow our talent pool and attract the best and brightest from around the globe.”

Could embracing failure be a step towards changing the culture in Australia to be more entrepreneurial? Indeed, whether we fail or succeed, being willing to take risks and ‘have a go’ is vital in Australia if we want to shift our culture to being more innovative. As we have mentioned previously, investing in research and development is a way to increase innovation. Although there are risks involved and failure is a possibility, R&D projects can generate valuable IP that can still assist in bringing innovation to the market. Have a chat with us today if you been involved in a R&D project and would like to see if you are eligible for the R&D tax credits.

With Australia having a clear agenda to boost innovation, are children the answer to shifting our culture?

According to Dr David Cropley, the University of South Australia associate professor in engineering innovation,  children should be educated in developing a more creative mindset to help  them secure future job opportunities in our progressively innovative economy. Dr Cropley elaborates by stating, “Part of the innovative mindset starts right back in schools. We’ve got to be educating kids to have a more creative and innovative mindset, to be open to new ideas and open to experiences — that begins at school.”

Already incentives have been taking place to implement children and shift our culture towards being more digital savvy and enterprising. Last week, Queensland made coding and robotics compulsory in schools from prep to Year 10 in a move towards embracing a more technical economy. Additionally, over the weekend, Wyatt Roy’s inaugural Policy Hack took place, where ten innovation ideas centering on culture, capital, co-operation and talent were pitched by teams of founders, investors, CEOs and members of the public sector.

The winning team was led by Erin Watson-Lynn who wanted to start a national Lemonade Day to produce innovative children. Her plan was to roll-out the day in schools across the country as a program open to primary school-aged children. The children would be involved in creating a business strategy, designing a marketing plan, and executing a business. Perhaps there would even be a research and development stage? Lemon to sugar ratio is a serious product development query.

Other key policy ideas for improving the country’s innovation raised at Policy Hack varied from instigating capital gains tax exemptions for start-up investors to setting up special ‘landing pads’ for Australian innovators heading overseas to hot-spots, such as San Francisco and Beijing.

Are children the future to our innovative society? Only time will tell, nonetheless, in the meantime there are steps companies can take to increase innovation in Australia. Research and Development can drive innovation for a company and result in new products and new processes for the environment. The Australian government encourages businesses to do this by allowing business owners to offset research and development with R&D Tax Credits. If you think you could be claiming cash back for research and development projects you’ve participated in, Have a chat with us today to see if you’re eligible.

“Innovation” has become a bit of a buzz word in Australia, with the Turnbull government focusing on an innovation agenda to create jobs in Australia. Without a doubt, innovation is a key driver of business success and can help drive the economy forward. As Bill Gates famously said, “never before in history has innovation offered promise of so much to so many in so short a time”.  

However,  is Australia as innovative as one would hope? A recent NAB Innovation Report Summary revealed just 13% of all firms rate Australia as “highly innovative”. The report further notes that “the number one motivation for innovation across the economy and for SMEs and ASX300 firms is to drive growth and revenues”  Indeed,these elements are important and research and development (R&D) can often boost revenue by investing in new opportunities. Moreover, it is no hidden fact that customers today demand more for their dollar, they expect higher levels of service and greater productivity. Businesses that don’t adapt to change and are content to ‘do it the way they have always done’, effectively put their long-term survival in danger. One way of combating this is R&D, which can involve investigating improved products and services, more efficient processes,  new methods of delivering services and other innovative strategies to get ahead of the competition. Ultimately, R&D is a prime example of innovation and can drive a company forward.

The fact is that many businesses are creating change, researching, developing or innovating, but are unaware that there is a substantial amount of government funding available. A common misconception is that R&D funding is only preserved for those in white coats. This is not the case, as each company engages in unique types of research and development within their business. In fact, the government encourages businesses within Australia to conduct R&D by offering R&D Tax Credits. Perhaps you could  be claiming cash back for the research and development projects you’ve invested in? Innovation can create new opportunities for your business and allow for the creation of new products or solutions. Contact us today to see if you are eligible to claim the R&D Tax Relief.

Malcom Turnbull is pursuing universities to turn research ideas into cash as part of his innovation agenda for Australia. Today it was announced that the Prime Minister has called a meeting on Friday aimed at finding more ways to drive industry collaboration  with Universities.

Previously, the government has included incentives to push researchers in co-operative research centres to focus more on commercial outcomes. For example, through the ‘Advanced Manufacturing Growth Centre’ chaired by former IBM Australia chief executive Andrew Stevens and ‘The Innovation and Collaboration Centre’ co-founded by UniSA, Hewlett Packard and the South Australian Government. However, despite this, when compared to other countries our researchers are not transferring to a commercial environment.

Mr Pyne, the Science and Innovation Minister, stated that there needs to be a cultural shift in Australian researchers. According to Mr Pyne,  many researchers believe that, “once your research is done your job is done” and ignore the commercial possibilities that come after that. This is reinforced by the fact that only 4 percent of our researchers in public institutions are involved in business.   With the Turnbull government’s innovation agenda creating positive buzz around Australia, it will be interesting to see how the government plan on turning research ideas into cash and commercialising the process.

Certainly, time will tell how the government plans on increasing the Australian landscape to be more innovative and collaborative. Those invited to Friday’s innovation meeting have been told little about the agenda, which is expected to be open and informal. Is it just a matter of including more generous tax breaks and incentives, or a matter of a simple culture shift?

In a recent report by PWC it was revealed that technology based start-ups are predicted to be worth over $US109 billion and have the potential to create 540,000 jobs by 2033. In light of this, and with Australia’s agenda for innovation backed by the Turnbull government, policy recommendations have been affluent.

Several companies and investors have pitched the idea of adopting the UK Scheme for tax breaks and R&D credits. For example, STARTUPAUS has recommended doubling R&D tax concessions and adopting the UK’s successful Seed Enterprise Investment Scheme (SEIS), by generating income and capital gains tax incentives for early stage start-up investments to support their growth and overall economic influence.

On the other hand, Dr Graeme Wald, Biosciences Managers’ investment director, noted that further incentives are required for R&D. In Dr Wald’s opinion, Australia should consider emulating Britain’s tax breaks on revenues earned from patents. Indeed, incentives would assist in improving the angel investing landscape in Australia.

By observing the success of the UK market, one can see the effect the government can have on driving the start-up ecosystem by creating local jobs and a culture that embraces an agile, innovative economy.  For instance, the UK government has increased R&D tax credits to 225 percent, which is comparable to Australia’s 150 percent for companies earning less than $20m. As a result from boosting the R&D tax credits, the UK’s R&D expenditure has increased by 40 percent.

It can be seen from the above breakdown that Australia’s economy is at a vital juncture. A new prime minister coupled with a contemporary innovation agenda, means we have the potential to build an innovative economy that is proficient at taking advantage of the vast opportunities technology is generating. Whether it is taking notes from the UK, or creating our own set of policies, the future for our economy is looking bright as it takes strides towards an innovation focus.

The newly announced Entrepreneurs’ Infrastructure Program will focus on providing support for businesses via three funding streams.

Stream 1: Business Management 

Allocated Funding: $207 million over four years

The first stream will help CEOs and managers “take time out to work on their business rather than in their business”.

With the help of advisors from the private sector businesses will develop plans for improvement and there will be access to limited funding to bring in additional specialists.

Stream 2: Commercialising Ideas

Allocated Funding: $141 million over four years

The second stream will provide a range of tailored commercialisation services designed to provide entrepreneurs and innovative businesses access to advice connection and support, to hence their prospects of commercial success.

Stream 3: Research Connections

Allocated Funding: $26.6 million over four years

The third stream will assist businesses understand the value of research, how to engage a researcher and how to negotiate agreements.

Receiving an AusIndustry ‘Request for Further Information’ (or RFI) can be a daunting thing. The important thing to remember that all companies at some point in time will be monitored through the AusIndustry Compliance Continuum. The RFI is just one of the way’s for AusIndustry gather information for this purpose, so there is no need to panic.

As the R&D Tax Incentive is a self-assessed claim, AusIndustry issues RFIs to ensure that all companies claiming the incentive remain accountable for their claims. It is an important aspect of the legislation as it requires each company claiming the incentive to really consider whether their activities are in fact experiments, are producing a new or improved product or process, as well as producing new knowledge.

Another important element that AusIndustry are looking for is whether the company claiming the R&D Tax Incentive has contemporaneous records of their activities. A recent decision by the AAT (NaughtsnCrosses Pty Ltd and Innovation Australia) clearly outlined the requirement for companies to have documentation to show:

1. that the activities being claimed actually occurred; and
2. that the activities followed the experimental process of hypothesis to experiment, observation and analysis, leading to conclusions.

This requirement can scare some companies into thinking that the only eligible activities are those carried out by people in white lab coats who write scientific papers about their experiments. However the fact is that experiments occur in a wide range of settings and the contemporaneous documentation required could include internal emails, minutes from meetings, design sketches, logbook records, or photos of a prototype.

Nevertheless, it is imperative that your company is prepared for the event of an audit if you are claiming the R&D Tax Incentive. We have devised a simple checklist to help you ensure that your business knows exactly what is required when AusIndustry come knocking…

• Audit Checklist – General

• Audit Checklist –Biotech

• Audit Checklist –Manufacturing

• Audit Checklist – Mining

• Audit Checklist – Automotive

• Audit Checklist – Electrical Engineering/ Software

As a registered tax agent firm, AusGrant can assist you at all levels of the R&D tax audit process.

To learn more, Click here to contact your local AusGrant representative.

The Small Business Advisory Services (SBAS) program last week announced 62 successful organisations that received funding offers for up to two years.
Established in the 2008 Budget, the Small Business Advisory Service has provided more than 392,000 separate advisory services to more than 207,000 small businesses around Australia.

Red More

NSW Farmers president Fiona Simson has urged the government to commit to further investigation of business support options for farmers to ensure the new national package of drought programs delivers better outcomes than the existing one.

Ms Simson spoke positively about recent discussions with the government on household support for farmers but was disappointed that business support was failing to attract the same attention.

See full report