Most of us have a great idea in us somewhere, and if Australian Businesswomen's Network members are anything to go by, it is clear there are hundreds if not thousands of clever women in Australia that are creating innovative new products, devices and services all the time.
If this is you, congratulations! Innovators such as yourself help to drive Australia forward and help keep us competitive on the world stage.
However, unless you have had great advice somewhere, it is likely you are unaware of the financial support the Australian Government has for innovators such as yourself.
The support is in the form of significant cash incentives driven through the tax system. The government doesn't do a lot to promote the program, hence it being a "secret", but 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.
How To Get Your Cash
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.
"The key thing to realise with these incentives is that they apply broadly to all companies of all sizes and in all locations in Australia. Don't let the term "research and development" put you off into thinking it is just for laboratories or big companies." says Caroline Hughes, Managing Director of R&D SmartTax. Caroline's dream is to see all the smart innovators more easily access their rightful entitlements, thus making commercial success more of a reality and helping Australia benefit in the process.
If you think that these cash incentives could apply to you, then there are a few easy steps to follow to make your claims and your cash a reality:
- Make sure your business is incorporated. Only companies can apply and trusts are not allowed to claim. Talk to your accountant or tax advisor if you are planning on doing much new product development as you will need to weigh the pros and cons of the R&D benefits versus other business structure benefits.
- Confirm the eligibility of your product. A great online tool called R&D Eligibility Wizard will step you through this in minutes on the R&D SmartTax website www.smarttax.com.au, also providing you with an estimate of your benefits.
- Add up your expenses incurred in the financial year on your product development.
- Prepare and submit your R&D Application form to AusIndustry within 10 months after the end of the financial year.
- When you receive your R&D registration number back from AusIndustry, lodge your Company Tax Return with the R&D expenses and R&D registration number included.
The very bare minimum cash benefit available is $7,500 for a claim of $20,000. And to get it all you have to do is follow the above steps. So now you know that there is money out there for all your hard work and bright ideas, all you have to think about is how to spend it.
Caroline Hughes is an R&D tax specialist with more than a decade's experience helping companies access R&D tax benefits. Caroline is Managing Director of R&D SmartTax which has just won Anthill Magazine's SMART100 award for best Australian innovation for its R&D Eligibility Wizard and R&D Application Wizard tools. To find out more visit www.smarttax.com.au or write to Caroline at caroline.hughes@smarttax.com.au.
