Indeed, the start of a new year often signifies the beginning of an onslaught of resolutions. Whilst breaking a coffee addiction, hitting the gym or eating clean are often the personal innovations that plague resolution lists, the goals of a company shouldn’t be left off the agenda. In particular, innovation, much like resolutions, helps to refresh, reinvent and re-energise companies.
In light of Turnbull unleashing his plans for an ‘ideas boom’ last month, Australia is somewhat playing catch-up in cultivating a digital savvy, innovative culture this year. One tangible way of expediting innovation is by investing in research and development (R&D). In fact, R&D has even been coined by economists as the ‘elixir of economic growth’. Hence, in 2016 companies wishing to develop products, improve technology, and increase cash flow should consider adding R&D to their businesses resolution list.
Furthermore, the government currently offers a lucrative tax incentive that can assist in funding research. The R&D tax incentive offered by the federal government is obtainable to Australian corporations that are incorporated under Australian law. The incentive aims to increase Australia’s innovation, competitiveness and grow the amount of export-oriented Australian industries. However, as at June 2014, fewer than 12,000 performing entities had registered for its benefits.
This is particularly so as the R&D tax incentive is a frequently overlooked opportunity for small and medium sized companies (SME) and start-ups, with many erroneously believing they are not eligible. However, by capitalising on the incentive’s benefits, SME’s and start-ups can produce generous tax savings, including generating cash for their past and future investments. In fact, the R&D tax incentive is one of the most effective methods of support for research in Australia and provides companies with up to 43.5 cents back for every eligible dollar. In essence, any firm developing or improving products, processes or software, for example, may be eligible.
Undeniably, self-censoring is the major barrier to companies claiming the R&D tax incentive. The R&D tax incentive is intended to boost innovation and improve business processes, by no means does the development or improvement effort have to equate to rocket science. Inevitability, R&D is a critical role in the innovation process and the investment in research is ultimately transformed into new business opportunities. Hence, prompting the question, what new prospects could R&D open to you this year?
Swanson Reed provides specialist expertise across a wide range of industries and has assisted many clients attain tax cash savings under the R&D regime. Contact one of our specialist R&D Tax consultants to find out more about the scheme.