Research and Development helps SMEs
SME News & Update
Undertaking Research and Development (R&D) activities can be very beneficial for SMEs.
You might have an idea or a concept which you think could be valuable if developed into a commercial product.
The object of the R&D Legislation is to encourage companies to conduct research activities that might not otherwise be conducted due of the costs involved.
The Government offers a taxation incentive for companies to conduct scientifically-based experimental activities, with the goal of producing new knowledge or information.
Obviously, there are rules governing how research activities and experiments are carried out and records that have to be kept. However, the benefits could be quite substantial.
A company that has undertaken R&D activities may be entitled to a tax offset for the R&D expenditure. If your company’s annual turnover is under $20million, or even nil, you may be entitled to a refundable tax offset calculated on the eligible R&D expenditure.
If the total R&D expenditure over any number of projects exceeds $20,000 in the financial year, then a small company can claim 43.5% of the eligible R&D expenditure as a tax offset. If the company is trading at a loss, the company can request in its income tax return that the value of the tax offset be paid into the company’s bank account by the ATO.
This can be a great assistance when a small company is starting out and undertaking R&D projects.
Completing a R&D project can make the small company an attractive investment proposition for investors. Alternatively, the company could apply for additional Australian government grants to assist them to firmly establish their business in the commercial marketplace.
ESS Small Business and our associated entity, Towers Business Development, assists companies to develop R&D strategies.
If you are currently not operating as a company, but you are interested in undertaking R&D activities, we can guide you on the steps that you need to take.
If you would like to know how we could assist you, please contact us on 1800 232 088 or send us an email peter@essbiztools.com.au. You are also invited to visit our website – www.esssmallbusiness.com.au.
