Hello, I’m Peter Towers, Managing Director of ESS Small Business and ESS BIZTOOLS. Welcome to Empowering SMEs.
Today we’re going to look at the Research and Development Tax Rebates and the Export Market Development Grant.
Research and Development
Research and Development Tax Rebates are only available for companies. If you’re undertaking research and development, and not operating as a company, if your expenditure exceeds $20,000 per annum on research and development activities (that expenditure can include labour of directors and employees as long as the wages/salaries have actually been paid) then I’d suggest you have a discussion with your accountant in relation to incorporating a company, so you can claim the research and development expenditure.
There is a registration process which means you have to register with AusIndustry by 30th April in the following year from the year of claim, e.g. for the 2016/17 financial year, you had to register with AusIndustry by 30th April 2018 or an earlier date, if you’re lodging your income tax return earlier.
If you are wishing to claim any overseas research and development expenditure you also have to register with the Australian Taxation Office by 30th June 2018. The overseas’ expenditure could have been with a researcher or a research organisation. You need to lodge, what is known as an Advance Overseas Finding, with the Australian Taxation Office for them to decide whether they will approve your overseas expenditure.
Companies, with turnovers under $20M, can claim the research and development expenditure at 43.5% of that expenditure. If your company is trading at a loss, you’re able to claim the research and development component, calculated at 43.5%, as a cash refund, which the Australian Taxation Office will pay to your nominated bank account within 30-days of lodging your company’s income tax return.
If you had a company with a loss of $120,000 for the year and $100,000 of that expenditure had been on research and development activities, then the company could claim $43,500, which would be paid by the Australian Taxation Office directly into the company’s bank account. Your carried forward losses would then be reduced to $20,000. ($120,000 - $100,000 = $20,000).
I recommend to you that you look very closely at what you’re doing, especially if you’re undertaking some research and development activities.
Export Market Development Grant
The next item I want to talk to you about is the Export Market Development Grant. This is another Australian government grant, which is available for any type of entity (whether you trade as a sole trader, partnership, trust or company) and your total income (Australia and worldwide) is under $50M per annum.
You can claim components of your expenditure, which have been expended to assist in export market activities. This can cover expenditure such as:
- overseas market visits (calculated at $350 per day)
- overseas representation
- free market samples that you’ve sent to potential overseas’ customers
- expenses for participating in Trade Fairs
- fees for the engagement of marketing consultants in overseas’ countries
- promotional material
An Australian-based business, such as in the hospitality industry, running a hotel or motel, or in ‘activity’ type businesses, such as:
- white water rafting
- cruises to the Great Barrier Reef
can also potentially be eligible to claim the Export Market Development Grant if more than $15,000 has been expended on export market development activities. This would cover expenditure incurred in direct promotions to people to come to Australia to utilise the business’ facilities or go on their tours etc.
The maximum amount which can be received for an Export Market Development Grant, is $150,000. Grant applications have to be lodged with Austrade by 30th November 2018.
If you have any questions or need assistance on either research and development or Export Market Development Grant claims, I’d suggest you speak with your accountant.
If your accountant does not undertake this type of work, you can send me an email – firstname.lastname@example.org – or phone me on 1800 232 088 and I will give you an introduction to an accountancy or business advisory firm which is a subscriber to our products, who will be able to assist you on either of these items.
Have a great day!
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Episode 007 - SMEs Update
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