New knowledge creates wealth
Towers Business Development News
The Australian Government rewards companies that undertake Research and Development (R&D) because historically, some of the companies that undertake R&D create wealth and generate more income tax.
There is a risk and obviously, not all companies that undertake R&D are successful. However, enough of them are to act as an example for other companies to follow suit.
It all starts with an ‘IDEA’!
This idea might have been something that was discussed over smoko, and a couple of the team members started inputting on the computer. Perhaps started creating something in the workshop and then they went and talked to their boss and said, “We have an idea!”
You could create a ‘small team’ to evaluate the ‘idea’. Is it practical? Has it already been done? Cost?
The preliminary investigations are concluded and a decision needs to be made whether to proceed.
Let’s check some of the issues to be able to claim the research and development tax offset…
Will the company spend more than $20,000 on R&D activities in the financial year?
Team members available?
Prior art searches conducted to check whether anyone else in the world has already researched this idea and has patented that idea. If so, you cannot claim the R&D tax offset.
If you don’t find any prior art and decide to proceed, you are required to document and keep records so that your company can claim the expenditure. These items are:
- A list of the core activities proposed for the project
- A list of the new knowledge intended to be produced from this research
- Please note that the outcome cannot be known or determined in advance
- A hypothesis or hypotheses needs to be determined for testing in the experimental stages
- Prepare a budget and then submit to your Board of Directors for approval (good corporate practice)