Frequently Asked Questions
What benefits are available under the R&D Tax Incentive program?
The benefit available depends on the “aggregated turnover” of the entity making the claim. In simple terms if turnover is less than $20 million the applicable tax incentive rate is 43.5 percent. For companies with turnover equal to or greater than $20 million the tax incentive rate is 38.5 percent.
Can a company “cash out” the R&D benefit?
Companies with “aggregated turnover” less than $20 million can convert the 43.5 percent tax benefit to a cash rebate. For companies in a tax loss position this yields a significant cash flow advantage (when compared with the R&D expenditure increasing a carry forward loss).
What is an eligible R&D entity?
An eligible R&D entity is normally a company incorporated in Australia. Trusts are not eligible R&D entities (unless it is a public trading trust). Partnerships and JVs are also not eligible R&D entities however the individual incorporated entities within these structures can be eligible.
How is the R&D tax incentive or cash rebate claimed?
The R&D benefit is claimed through the company income tax return, lodged after the end of the financial year. To make a claim the R&D activities must be registered with AusIndustry and a unique registration number obtained. This is included on the ATO R&D Schedule lodged with the company tax return.
Is there a lodgement deadline to make a claim for R&D?
Yes, the R&D Application must be lodged on or before 10 months after year end. Lodgement and registration is an annual requirement, for R&D activities undertaken and expenditure incurred in each financial year. It normally takes 5-10 business days, post lodgement, for an R&D claim to be registered by AusIndustry.
What is the EMDG program and what entities can claim?
The EMDG program is a capped grant program that reimburses up to 50 percent of eligible expenditure incurred in developing overseas markets. Entities with turnover less than $50 million can claim the EMDG for up to eight years.
What is the cap on the EMDG?
The cap on the EMDG is $150,000 per claim. The program reimburses up to 50 percent of expenditure in excess of $5,000, with a minimum spend of $15,000. First time claimants can claim for two years. Claims after the first two years are capped as a percentage of export earnings.
I have a great new product, process or service. What assistance is available to help my business commercialise this opportunity?
Part of the Entrepreneurs Programme, Accelerating Commercialisation offers $1 for $1 matched funding up to $1 million. Other assistance includes commercialisation guidance and portfolio services such as networking assistance. A turnover limit of $20 million applies to applicants and there are 6 merit criteria that must be addressed in the application.
What sort of broad-based business assistance is available?
Business assistance can be “in kind” or financial. Grants are available for initiatives including encouraging collaboration, provision expert advice/mentoring or facilitators, creation of new jobs, business expansion, exporting, sustainability, improving supply chain, infrastructure assistance, purchasing of equipment, training and skill development.
Can you claim a grant for a project already underway?
Most grant programs are prospective, that is they apply to planned projects that have not yet commenced. When you consider that the “need for funding” is often critical this makes sense as companies are applying for funding so that they can undertake a project, not reimburse or subsidise a project already underway.
Are there grants and incentives for expanding my business operations – new facilities and plant/equipment?
There are! Specific programs, often state-based, exist for businesses looking to grow and create new jobs. Some are geographically-based, others sectoral. Funding is matched and varies between 25-50 percent funding. These grants are competitively based and prospective.
Are grants refundable if the project isn’t completed?
Grant payments are made based on the achievement of agreed project milestones. As such the payment is a reimbursement for expenditure incurred. Failure to achieve a milestone will mean that an agreed payment will not be made. It's therefore that the funding agreement covering the grant is realistic with milestones and timing being achievable. Other funding programs are loans. In both cases monies paid or loaned will be refundable if a project KPI isn’t completed or the project changes.
What is the difference between a competitive and self-assessment grant or incentive?
Grants are competitive where there is a set pool of funding to be distributed. If you are looking to secure a competitive grant it’s imperative that you can strongly address each of the merit criteria for the grant. Competitive grants also tend to be prospective. Conversely self-assessment programs are “entitlement” based and retrospective. If you meet the qualifying and eligibility criteria you are entitled to make a claim. Self-assessment programs can be either capped or are not subject to a maximum claim.
Are incentives and grants targeted to specific industries?
Yes. In some cases, grants are targeted to “growth sectors”. Growth sectors can be state-based and/or part of the national benefits merit criterion. Current state growth sectors include new energy technologies, food and fibre, medical technologies and pharmaceuticals, transport technologies, defence, construction, education and professional services. National growth sectors include advanced manufacturing, food and agribusiness, medical technologies and pharmaceuticals, mining equipment/technology and services and oil/gas and energy resources.
How long does it take to get approval for a grant?
Timeframes vary. The application process for a grant often starts with lodging an expression of interest (EOI). This is a high-level summary of the proposed project. A departmental case officer will then work with you to advise on the project before a decision is made whether or not to lodge a more detailed formal application. On average it can take up to three months between lodging an EOI to receiving a decision on the outcome of the application.
Are there any incentives and grants for start-up companies?
In short, yes. Programs such as the R&D Tax Incentive and the EMDG program can be claimed by start-ups. Similarly, wage subsidies and payroll tax rebates also exist for start-up companies. For larger grants a track record of financial performance and a displayed capability to manage a project is required. That said, there is always a grant and incentive program at least worth considering.
Why engage with Incentive Advisory?
Identifying, applying for and managing grants and incentives for our clients is what we do. We have worked in this space for nearly 25 years. We recognise that the application is only one part of the grant and incentives process.
Our track record and proven methodology ensures that we work with our clients, strategically, to best position them for success.
We have established strong relationships and have a solid risk profile with key decision makers and government authorities and bring the benefit of this to your engagement, making sure you are introduced to and build rapport with the right stakeholders.