In Emma’s monthly contribution to Shoestring, she writes about one of the key questions we get asked by startups:
Is my startup eligible for the R&D Tax Incentive?
To assist with understanding R&D Tax Incentives better, we interviewed Scott Warnock, a Director at PwC. Scott specialises in R&D Tax Incentives and and has worked with many startups around Australia assisting them in obtaining tax incentives and Government grants.
Without replicating the full interview here, we have included some of the main points that are useful for startups:
What is the R&D Tax Incentive opportunity?
Scott Warnock: The R&D Tax Incentive is the Australian Government’s key program to support R&D and innovation. It provides companies with up to 45 cents back for every eligible dollar, even in many cases where startup companies are not yet paying tax.
How does the claim process work?
Scott: It is a self-assessment program, which is different to most Government grants (these are typically competitive in nature). In short, companies can access the R&D Tax Incentive through a two-stage process that involves:
- Registering: Register R&D activities with AusIndustry (on behalf of Innovation Australia) within 10 months after year end; and
- Claiming: Claim the tax offset in the annual income tax return (which would include the ATO’s R&D Tax Incentive Schedule detailing the R&D expenditure incurred).
The deadline for 30 June 2013 year ends is quickly approaching! Companies must lodge an application with AusIndustry by 30 April 2014.
What types of costs can I claim?
Scott: A broad range of costs can potentially be claimed, including salaries, on-costs, contractors, rent, and other overheads. There are a number of areas such as legal costs (including patent costs) that need to be considered on a case by case basis – the eligibility of these costs tends to be very fact specific.