What you need to claim the R&D tax incentive, in simple terms
Each year startups and scaleups across Australia use the R&D tax incentive to build and grow, without giving up equity. Sounds great, but it can be very time draining, and to be honest it’s pretty complicated too. If only there was an expert who loved complex R&D tax claims…oh wait…there is! Meet John Nixon.
1. What you need to do:
There are things that must be done – and if you get on top of it all you’ll find the application process so much easier. Here’s a list to get you started:
- Keep records to substantiate your R&D activities and expenditures: check AusIndustry record keeping guidance here
- Put together timesheets to determine either R&D or non-R&D labour
- Consult the ATO (in)eligible expenditure guidelines here (and here too!)
- Evaluate evidence to support the connection of expenditures to R&D activities
- Bring forward any R&D related expenditures as the EOFY approaches
- Collect and pay invoices before EOFY, and collect and pay invoices if cash accounting (from R&D contractors for example)
- Know the deadline is 30 April for the previous financial year ending 30 June
- Receive R&D funds faster through financing – check out how and from who, here
2. How we can help you:
Now you’ve looked over that, here are the things we can help you with to remove the stress for one less thing to worry about!
- Eligibility: we’ll suss this out together, but in short your company needs to be eligible and so do your project activities and their costs
- Crafting the narrative: if you need us to prepare your technical descriptions, we might need to charge extra (but we’ll discuss this first)
- Calculations: we’ll calculate the expenses you can claim (attracting up to a 43.5% tax offset on eligible expenditure in the prior financial year)
- Application: we’ll bring it all together in your AusIndustry registration application, we’ll also prepare the tax schedule that needs to be lodged alongside your company tax return with the ATO – deadline is 30 April for the previous financial year ending 30 June
- Registration: AusIndustry will provide a registration number for your application – remember, this is an annual opportunity!
- The cash injection: what you receive depends on turnover and profitability – if you’re profitable, your company tax will be reduced by 18.5% of eligible expenses, if you have enough tax losses, you’ll receive 43.5% of your eligible expenses back as cash (if you have over $20m turnover, it’s more complicated)
3. What’s next?
We are here for you at all stages of the journey, and when it comes to R&D it’s always comforting to know you’ve followed the right process. So don’t leave it to chance, get in touch with John here, he would love to help.
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