News and Research

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.