It’s long been a cornerstone of support for innovative Australian businesses, but we know that many startup founders find that navigating their way through the processes required to make a claim can sometimes feel more like a maze than an exciting fast track to growth. Even though the key intention of the RDTI is to reward investment in experimentation, the reality for many founders is that accessing the tax offset comes with significant and sometimes overwhelming challenges.
But never fear! We’ve put together some of the most common pain points Aussie founders (just like you) may face, to let you know you are not alone – and we can help.
Red tape and admin complexities
One of the biggest barriers to accessing the funds is the sheer complexity of the application process. You’ve already got enough on your plate already – so when you look at the amount you need to record and explain it can be quite off putting. The RDTI requires detailed documentation of eligible activities, contemporaneous record-keeping, and often precise apportionment of costs. Without dedicated internal resources or specialist advisors, this can feel overwhelming and time-consuming, so it’s extremely important to try and keep track of all activities early and as you go – and engage an expert to make sure you’re doing it right
Audit fear and policy change uncertainty
The fear! It’s real – but doesn’t need to be a deterrent. While the Australian Taxation Office (ATO) and Department of Industry, Science and Resources (DISR) have increased scrutiny over RDTI claims in recent years (intended to improve the integrity of the program), it’s had the unwanted side effect of making founders nervous. The risk of being audited, or having to repay previous claims, has led some businesses to avoid claiming altogether, even when they may be eligible. It’s confusing when there is uncertainty in areas like eligibility criteria, caps, and program interpretation, which all adds a spicy layer of unpredictability to the RDTI process, and can make it harder to confidently model funding projections. These concerns can be eased by having a deeper understanding – we all fear the unknown, but luckily this is one of our expert subjects so you don’t have to face it alone!
The grey zone of software R&D
In the Saas startup world, one of the most debated areas of the RDTI is the eligibility of software development activities; we see many tech founders struggle to determine whether their work qualifies as ‘core R&D’ under the legislation. The intangible nature of software development – and its often-iterative process – adds complexity to claims, and leaves many startups in limbo. Don’t get stuck here – we love those complex claims and can definitely help you wade through the confusion.
Reliance vs. incentive
Cash strapped startups who see the RDTI as a critical funding source are feeling the tension from policymakers who have pushed back on the idea of businesses relying on the RDTI to fund innovation, arguing that companies should invest in R&D because of its long-term strategic value, not just because an incentive is available. If you feel like you may be one of the startups relying on these funds but struggling to wait, check out another one of our articles to see how to get your R&D money, faster – support and avenues exist to access the funds you may not have looked at before.
What’s Next
These RDTI issues and struggles are common – so we want you to know you are not alone! While the RDTI remains a crucial support mechanism for Australian innovation, it’s obvious that many founders face real barriers when trying to access it. Let us help – we understand what you are going through, and can help at any stage of the R&D journey. We have a ton of resources for you to check out on the RDTI, and all other financial matters, so take a look and get in touch.
