Research and Development Introduction

Our Members are able to click on to the ESS BIZTOOLS’ website which is available 24/7 to assist in answering  questions with responses such as:

• You do not apply for a Research and Development Grant – a company that is spending more than $20,000 in the financial year on legitimate Research and Development Activities (irrespective of the number of projects) is able to claim that expenditure as part of a Research And Development Tax Rebate Claim.
• We have a Flowchart (FC050) which explains the process from the “idea” through the introductory stages of the Research and Development Process through to “an application being lodged with the company’s Board of Directors for a Research and Development Project to be commenced”.
• The taxation benefits for a company with a turnover of less than $20 million per annum is a taxation rebate calculated at 43.5% of the legitimate Research and Development Expenditure which has to be supported by documentation that we can give you guidance on.
• The actual Research and Development Experiments have to be conducted by you or someone that you appoint which could be a team member, University consultancy team or a specialist Research and Development Consulting Firm. We are not normally able to assist you in the actual research activities.
• Our role would be that we will ensure that the documentation that is required for the research activities – what was conducted – what was the result – what was the costs. In summary a “Internal Auditor Role” will be documented and recorded to substantiate the claim that will be made at the end of the financial year.

A significant benefit of the Research and Development Scheme for a small company (turnover less than $20 million in the financial year) is that if the company is trading at a loss and the company is undertaking Research and Development Activities that when the company’s Tax Return is lodged you could make an election that you would like to receive a refund of the calculated amount of the Research and Development Rebate, subject to the accumulated losses within the company being larger than the calculated amount of the research and development rebate.

For example if your company spent $100,000 on legitimate Research and Development Activities the Research and Development Rebate (43.5%) would be $43,500. If your company’s losses at that stage were $50,000 the Australian Taxation Office would direct deposit $43,500 into your company’s bank account and your tax loss carry forward figure would be reduced to $6,500.

This can be a significant cash flow benefit for a company that is getting started on Research and Development Activities.

How much money do you think you would spend in the next 12 months on Research and Development Activities – these costs include your team members’ wages if they work on the project and maintain records of the time they spend and what were the results of those experiments and there are other expenditure items that can be claimed which we could give you an overview on.

I will send you the Flowchart of Stage I of the Research and Development Process together with a paper which gives you additional information. How about we have a discussion over a cup of coffee next week and you can give me an overview of what you have in mind (but not of your intellectual property, that is your company’s asset and you need to safeguard it) because it could be quite valuable in the future.

I will then be able to give you an overview of the support services that we can provide to assist you to comply with the Research and Development Rules and legally maximise the claims that are available for a company like yours.