Are Your Competitors Claiming R&D Tax Breaks?

4 May 10

By Caroline Hughes, Managing Director, R&D SmartTax www.smarttax.com.au

In this current economic climate we scrimp and save to make sure every last dollar is fully utilised in helping us stay afloat. But do you ever look at your competitors and wonder if perhaps they are getting an extra hand from somewhere?

Well chances are you are thinking correctly – they are getting an extra hand, and from a very unlikely source, the Australian Government and in particular, the ATO.  Unless you have had great advice somewhere, it is likely that you are one of thousands of smart Australian businesses that are unaware of the support the Australian Government has for manufacturers such as yourself.

The support is in the form of cash incentives for innovative ideas driven through the tax system.  If you look up either the AusIndustry or ATO websites you will see it under the heading of  Research and Development (R&D) Tax Concession or R&D Tax Offset.

Most manufacturing businesses don’t realise that the work they do on a day to day basis to stay competitive could very well be eligible for these R&D Tax Breaks. But don’t let those good ideas and the risks you took to commercialise them, go to waste. Make sure you claim your R&D Tax money back and get that cash in the bank, just like your competitors.

How it works is that you first need to spend some money on your idea. Then you claim it back through your Company Tax Return and then the ATO will send you a cheque. Which you can then use to spend again on your idea or whatever you like.  Every year. If you are a small business less than $5 million in turnover, this cheque can be as high as $750,000 for the 2010 financial year. Basically, the more you spend, the more you get back. It is easy to work out by multiplying your R&D spending by 37.5%.

Once you are incorporated as a company you can start adding up your R&D spending from the first moment you start researching your idea. And it doesn't end until you have technically proven your concept. Wages, travel, materials plus many other expenses - all eligible to be claimed.

Making the claim for R&D Tax Breaks requires you to firstly self-assess your eligibility, then submit your R&D Application to AusIndustry before putting your R&D expenses through your Company Tax Return. There are now a number of tools on the market designed to make these steps easy and quick. One is called the R&D Eligibility Wizard and can be found on the R&D SmartTax website www.smarttax.com.au, a one-stop-shop for R&D Tax Claims. Within minutes you will not only know whether your company and your projects are eligible, but also get an estimate of how much money you are likely to get back.

Thousands of Australian companies, including many manufacturers, rely on these funds, so make sure your company isn’t the only one that is missing out.  Visit R&D SmartTax at www.smarttax.com.au today.