Estimated Time to Read: 3 minutes
Research and Development is an area where not many companies can venture. This is because there is a huge amount of risk involved in running such business. There are two types of risks involved:
o Capital expenditure: There is not deterministic expenditure on such activities. There is also no time line in which there could be realistic output.
o Results: There is no guarantee on the results that the research activities could yield at the end of the research cycle. The results could be positive or negative which could result in great losses.
But such activities are the need of the hour and they help in the economic and financial development of the country. They also help in wealth creation and creating valuable intellectual property.
Hence to encourage such research activities, the government of Australia, along with the AusIndustry (have come up with a scheme called the R&D tax incentive. With the help of this scheme you can avail a R&D tax finance to fund your R&D activities. Your research should be in the area of technological development and it should be beneficial to the common masses. Also, if your research activity is already funded by any other parent company or agency then the amount of Research and Development tax credit that you can avail would vary.
To avail this facility, you need to be a regular payee of the corporate taxes to the government. It does not matter if you a SME (Small and Medium Enterprise) or a large company. You could also be a start-up venture – your research activities can claim the R&D tax credit. You need to register your project and activities with the AusIndustry.
You can claim for the R&D tax credit along with the corporate taxes itself. All you need to do is to provide a written proof to the government about the research activities that you are undertaking, the persons involved and the about of capital expenditure that you are incurring. This is applicable to both profit making companies and to the companies that are incurring losses. If you are eligible for this benefit you can avail this facility in two forms:
o The reduction of your corporate taxes
o In the form of cash flow between the government and your company
Before availing the R&D tax credit from the government, your company could be in need of financial assistance. The government has thus made provisions for the same. This is called the R&D tax loans.
There are some financial agencies that are ready to fund your research and development activities. They provide financial assistance in the form of loans. With the help of these loans, you can:
o Run your business efficiently without having to think about further fund raising
o Plan for commercialization or expansion of your research
o Add additional resources for working on the project
The R&D tax loan is given by the financial agency with a set of terms and conditions. These terms and conditions are specific to the research activities that you are conducting. Read the offer documents carefully before signing in for any agreement with the funding agency. Also, there could be a rate of interest at which you need to repay this loan. However, the R&D tax loans can be repaid only after you avail the R&D tax credit from the government.
- Importance of Supporting Documentation in Your R&D Tax Incentive Claim When you are running a business, there are a lot of things that you need...
- Things You Should Know Before Claiming R&D Tax Relief What is R & D tax relief? Scientifically creative and innovative companies are the need...
- Essential Tips for an Effective R&D Tax Funding Strategy Research and development are key to a stable economy of the country. Research and development...
- R&D Tax Credit: New, Improved, and Permanent The Research and Development Tax credit is useful for companies to reduce their Federal tax...