Starting a Research and Development Project

A Research project normally starts with an ‘idea’. Someone has a yarn to the manager and asks why something couldn’t be done differently.

If management thinks that the idea might have some value, a small team may be formed to undertake some preliminary investigations to determine whether the concept appears to be feasible.

If this process indicates that there might be value in investing time in exploring the concept, the next step should be to check what the taxation consequences might be. You’ve probably heard that R&D can be undertaken with some taxation advantages. However, do you know that you have to be a company to claim the specific taxation benefits that can be achieved from a R&D activity?

You don’t need to have a minimum turnover or to be trading at a profit. You just need to have a company which will be the entity that undertakes the R&D research activities.

The next step is to check “prior art and literature”, to see whether someone else also thought of this idea, have already finalised their research and registered a patent somewhere in the world. If this has occurred, the Australian government is not going to allow your company to claim R&D taxation benefits to replicate research activities someone else has already undertaken.

When conducting the “prior art and literature” searches, it is important that the results of those searches are printed, dated and retained. This will help you establish at a certain time that you cannot find any prior art or literature that relates to your project. Furthermore, you have retained that information which will act as an evidence if you are required to justify why your company is entitled to the R&D tax offset.

Towers Business Development can assist your business with the R&D process. To find out more, call 1800 232 088.