There are real opportunities for companies exploring new technology to benefit from government incentive programs.

We asked Melanie Reen from Michael Johnson Associates, a company which specialises in helping Australian companies obtain maximum value from R&D tax incentives and other government support for innovation, to share a few words with us about the R&D tax incentive program.

Guest post by Melanie Reen

Melanie Reen of Michael Johnson Associates. August, 2014. Photography by Matthias Engesser/Narrative Post

Your company might be associated with design, the arts, advertising or marketing. These industries are not in themselves typically associated with “research and development”.

However, for small to medium-sized companies developing a new or improved product, service or process, it is the intersection of these artistic pursuits with digital technology that may open up the opportunity to benefit from the federal government’s R&D tax incentive.

In a nutshell, indicators that your company may be undertaking eligible R&D and be entitled to this tax offset include:

  • You are generating new knowledge, by way of experimentation, to prove or disprove a hypothesis.
  • You employ, directly or under contract, people with a technical qualification, such as engineers, mathematicians, IT professionals.

The benefits to your company are:

  • A tax offset of up to 45% of your R&D expenditure claimed through your company tax return, with a reduction in tax payable that is equal to an after-tax benefit of  up to 15c in the dollar.
  • If your group turnover is under $20 million, and you are in a tax loss position, the tax offset may result in a refund of up to 45% of your R&D spend.

The program is jointly administered by AusIndustry and the Australian Tax Office (ATO) and can be accessed by registering your R&D activities with AusIndustry within 10 months of the end of your financial year. The tax offset is then applied by lodging an R&D tax schedule along with your income tax return.

The R&D tax incentive is a generous program designed to promote innovation. In the long term it aims to help improve productivity, boost competitiveness with global markets, replace imports with innovative Australian products, promote the export of new technology, and ultimately to support companies and our economy to grow.

Talk to us about innovation and design thinking.