Have you heard of the R & D Tax Incentive? There are currently more than 10,000 companies claiming a total of $1 billion a year through the Federal Government’s R&D Tax Incentive, which refunds 43.5c of every dollar spent under R&D programs registered with Ausindustries. But there are so many more that don’t even know that it exists!
This is the Federal Governments way of supporting innovation. But don’t just think its for large industry. It is open to any sector that is conduction eligible R & D. So, want to know if your business is eligible? The ATO states, “Broadly speaking, your eligibility to claim R&D tax offsets will depend on whether or not you are an R&D entity and, if you are, whether or not you have incurred notional deductions of at least $20,000 on eligible R&D activities.” Under the program you self-assess whether or not your company is eligible to register activities and claim the R&D Tax Incentive in any given year. You can find out more here and be sure to ask your accountant if you think you may be eligible.
So how does it work? Currently companies incur R&D expenditure during a tax year and then apply for a refund as part of their tax return. The downside is it can take up to 18 months from spending the money before receiving the refund, which isn’t great for cashflow.
But never fear, there are companies out there like Perth based Radium Capital that offer quarterly advances to companies on their expected tax refund resulting from eligible R&D expenditure. Rather than waiting up to 18 months to get a lump sum they can provide a quarterly refund advance on money spent in the previous three months and that money can be reinvested straight back into further R&D. For a small company, this has a massive impact on cash flow and total working capital requirements.
There are thousands and thousands of innovative companies answering the Government’s call for us to be an ‘innovation nation’, better check if you can be one of them.