{"id":1015,"date":"2016-06-10T07:04:30","date_gmt":"2016-06-10T07:04:30","guid":{"rendered":"http:\/\/ausgrant.com.au\/?p=1015"},"modified":"2017-05-31T01:43:44","modified_gmt":"2017-05-31T01:43:44","slug":"is-financing-innovation-a-major-factor-of-success","status":"publish","type":"post","link":"https:\/\/ausgrant.com\/au\/is-financing-innovation-a-major-factor-of-success\/","title":{"rendered":"Is Financing Innovation a Major Factor of Success?"},"content":{"rendered":"

\"\"<\/a>Undeniably, we live in the\u00a0so-called\u00a0\u201cdigital age\u201d. Innovation has formed an important role in our modern society and has been touted as the blueprint\u00a0for\u00a0success by the Turnbull government. It plays a key role\u00a0in\u00a0medical and environmental improvements, and by its commercialisation, the digital industry also has the potential\u00a0material economic impact. Thus, it is crucial to fully understand innovation\u2019s drivers and processes \u2013 from both a socio-economic and a business perspective. Within this scope, adequacy financing the major players of this industry, the predominantly young and highly-innovative companies, is a major factor of success.<\/p>\n

Furthermore, empirical evidence shows that start-up firms play a vital role\u00a0in\u00a0the advancement of the digital industry, mainly due to their function of serving as a\u00a0technology transfer\u00a0mechanism to bring research from the academia to the marketplace. In fact, according to PWC, the Australian tech start-up sector has the potential to contribute $109 billion, or 4% of GDP, to the Australian economy and 540,000 jobs by 2033. Irrefutably, it is widely recognized that high-tech\u00a0start-ups\u00a0are a major source of new innovations and the very nature of innovation is that it\u00a0involves,\u00a0research, experimentation and development. Thus, leveraging the outputs of high- tech research and development (R&D) is key in the creation of a successful Australian start-up ecosystem.<\/p>\n

However, access to finance remains a key bottleneck for SMEs that are undertaking research and development. As a result,\u00a0majority\u00a0of the governments around the world\u00a0incentivise\u00a0start-ups to undertake R&D activities through tax breaks.\u00a0\u00a0<\/strong>This is because it is recognised that R&D often coincides\u00a0with innovation and productivity, which essentially drives nations forward by solving problems and creating opportunities.In Australia, the government provides a lucrative incentive to companies undertaking R&D work in the form of the R&D Tax Incentive.<\/p>\n

To elaborate, the incentive helps by offsetting some of the costs of performing R&D. For instance, if your business turns over less than $20 million in revenue and you are in a tax loss position, then up to\u00a043.5% of your eligible R&D expenditure\u00a0with be refunded by the Government in the form of\u00a0annual cash rebates. This means real working capital for a\u00a0project and cash flow for a\u00a0business, so the focus can be on\u00a0developing a\u00a0product without the\u00a0pressure of\u00a0needing\u00a0funding.<\/p>\n

As noted above, the refundable component applies to businesses making a loss, which many tech start-ups originally will be. Most importantly, these companies receive it back as\u00a0<\/em>cash<\/em>\u00a0\u2013 which is exactly what a start-up needs to help get its business off the ground. Nonetheless, the benefit also comes in the form of tax credits for businesses making a profit.<\/p>\n

On the whole, the R&D tax incentive is designed to encourage investment by Australian businesses in R&D, and it works. Knowing\u00a0those companies\u00a0will receive this money back at the end of the year allows them to invest more in R&D than they would otherwise. Without continued R&D, firms risk losing both reputation and competitive positioning in the market, and could\u00a0gradually decline\u00a0through failure to invest in new products,\u00a0technologies, and processes.<\/p>\n

Contact AusGrant <\/a>today if you would like more information on the R&D Tax Incentive and what this could mean for your business.<\/p>\n","protected":false},"excerpt":{"rendered":"

Undeniably, we live in the\u00a0so-called\u00a0\u201cdigital age\u201d. Innovation has formed an important role in our modern society and has been touted
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