R&D Planning

Research and Development ("R&D") can provide valuable information and guidance for growing a business. Defining a businesses target market, identifying the customers needs and then developing new products and services that fit these customer needs. Research and Development is of particular importance to innovation within a business, and plays a critical role in the innovation process. It provides an understanding of technology investment requirements now and in the future to produce new products, processes and services. 

The Australian Government has provided additional support with businesses undertaking R&D, regardless or whether you are a start up or an existing business. They provide businesses help through grants under the following components:

  1. Those with a turnover less than $20 million per annum could be eligible for 43.5% refundable tax offset (provided they are not controlled by income tax exempt entries).
  2. Non-refundable 38.5% tax offset for all other eligible entries. Unused non refundable offset amounts may be able to be carried forward for future income years. 
R&D spending falls into two categories - core R&D activities and supporting R&D activities, both of these can be claimed. With R&D core activities they are generally experimental, the outcome of which cannot be known. For supporting activities you must be able to prove that the expenses incurred were in fact incurred supporting the core R&D activities.

R&D spending can complicate your financial books. Ensuring that you use a professional book keeper or accountant that has experience reporting R&D spending is crucial. They can structure your company expenses in order to maximise the benefits.

The payment is linked to your ATO tax return. So ensuing that the company tax return is completed as soon as possible in the new financial year will help you get the grant money as soon as possible. Even though your tax return may be processed, or tax system has a self-assessment system and as such you may be audited later. Therefore, using a reputable and experienced tax professional to perform your reporting will ensure that your books are in order, making an audit pain free.

There have been a number of recent cases before the Administrative Appeals Tribunal, and this has identified that the reporting requirements to substantiate the R&D tax incentive is far more stringent than the previous R&D tax concessions program. Beyond expenses invoices you will need to keep other documents such as minutes from meetings, log book records, technical project documentation, trial plans and results, and photos or videos of prototypes.

For established and new businesses the R&D tax incentive provides significant support to the potential growth of a business. Therefore it is supporting innovation in Australian businesses and making them more competitive both locally and on the global stage. Because there are so many areas where you can become unstuck when applying the grant and claiming the grant it is best to invest the help of a professional.

To enquire about how Azure Group can assist with your R&D Planning needs get in touch today 


Azure Group's coverage of the 2017-18 Federal Budget
Which Accounting Software Is Best For You?

About Author

Azure Group
Azure Group

Azure Group is the leading Chartered Accounting, Business Advisory and Strategic Advisory firm supporting the growth & success of fast growing entrepreneurial businesses.

Related Posts
Optimising Customer Success for Sustained Tech Startup Growth
Optimising Customer Success for Sustained Tech Startup Growth
How to write a Winning R&D Tax Incentive Application
How to write a Winning R&D Tax Incentive Application
How Tech Startup Accountants Can Propel Growth with a Growth Mindset
How Tech Startup Accountants Can Propel Growth with a Growth Mindset


Subscribe To Blog

Subscribe to Email Updates