“Embrace technology disruption” – the phrase has been heavily bandied about in public discourse lately after Turnbull announced the expression in his first statement after being elected Liberal leader last year. Although generally pertaining to the topic of Turnbull’s ‘Idea Boom’ or about shifting the culture of Australia, a new report reveals Australian small and medium-sized enterprises (SMEs) have already been embracing the technology disruption over the past year.
The biannual MYOB Business Monitor, released today, surveyed over 1,000 Australian SME business owners and discovered investment in technology by SMEs has increased over the last 12 months. Certainly, technology can drive innovation and assist SMEs to do business more efficiently and service customers better. Moreover, many businesses in Australia can learn from having a ‘start-up mentality’. Results from a recent Commonwealth Bank research report found that innovation is valued more by smaller Australian businesses than larger ones. Adam Bennet, Commonwealth Bank’s group executive of business and private banking, said that the findings show a need for mid-size businesses to think more like start-ups when it comes to innovation.
Aside from revealing the fact that SMEs are investing heavily in technology, the MYOB report delved into the five major barriers to innovation. In sequential order, the top five hurdles that the largest percentage of respondents cited were:
Thus, despite investing deeply into technology, the costs involved in developing technology can somewhat impede SMEs innovation goals. However, Turnbull’s Innovation Statement released last month seeks to transition Australia away from the mining boon and modernise the economy. Turnbull’s policy platform includes addressing regulatory barriers around start-ups and reducing red tape, which may aid in the eradication of this barrier.
However, in the interim, to combat the cost of engaging in R&D activities and the development of technology the government currently offers a generous R&D Tax Incentive. This is a frequently overlooked opportunity for smaller companies, with many SMEs mistakenly believing this is exclusively for large corporations or those engaging in ‘white coat research’. By capitalising on these opportunities, SMEs can produce generous tax savings, including generating cash for their past and future investments or developments.
In fact, R&D claims can earn up to 45 cents per dollar spent on creating new technologies. In essence, any firm developing or improving products, processes, or software, may be eligible. Certainly, the R&D credit is available for SMES – but companies do need to take the initiative to apply to get it, the government isn’t merely offering out credits.
If you think your SME may be eligible, have a discussion with one our R&D tax specialists who will be able to answer any further questions or help you make your claim.