Cash Opportunities for R&D

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1 Cash Opportunities for R&D Rewarding your Innovation & Enhancing your Profitability May 2015 Daniel Knox Director R&D Incentives Imelda Alexopoulos Director R&D Incentives

2 R&D Tax Incentive Background to the program 1 Federal Government s largest program to incentivise R&D - $1.7b spend p.a. 2 The tax offset program is deliberately broad-based 3 Applies to a wide range of companies you don t even need to own a Bunsen burner 4 Entitlement basis not a competitive process 5 Retrospective application process (up to 10 months after financial year end) you can receive a benefit for activities you have already conducted (activities from 1 July 2014 still up for grabs). PwC 2

3 Eligibility Must be in a company (not a trust, partnership, sole traders) Must have undertaken eligible R&D activities Minimum of $20,000 in eligible expenditure PwC 3

4 The benefit of the New R&D Tax Incentive The two core components of the R&D incentive are: Grouped Turnover test <$20m <$20m 45% offset 40% offset PwC 4

5 R&D Tax Incentive An example: $250K project Example - <$20m Turnover Eligible R&D Spend $500,000 45% Refundable Tax Offset $225,000 Potential max Tax Refund $225,000 Example - >$20m Turnover Eligible R&D Spend $500,000 40% Refundable Tax Offset $200,000 Reduction in tax payable (40%- 30% corp tax rate) $50,000 PwC 5

6 What are R&D activities and where to find them How do I tell if I am undertaking eligible R&D? Are you developing something new? (this can be a new product, a new process, or service) Are you solving a problem or overcoming a technical challenge? Is there a gap between what is currently known and understood about this product/process/problem and the solution? Will testing or trialling be required to determine or develop the solution? Are you trying to achieve or extend industry best practice? Is the outcome of the R&D unknown when you started? PwC 6

7 Examples of R&D activities in horticulture Developing and trialling new varieties of fruit Development of new processing techniques for fruit Growing trials of fruit in atypical regions Applying new technology or off-the-shelf technology from different industries / different applications in a new way Developing new methods to combat weeds / pests Developing new methods to package and transport products Develop new methods to modify the behaviour of your crop i.e. flowering, ripening, spoiling, increase or change timing of yield Development of new value added products PwC 7

8 R&D Expenditure What types of costs can be claimed for R&D? Salaries and on-costs Contractors / Consultants Direct costs (e.g. materials, travel, etc) Trial crops / plantings and associated maintenance Reasonable portion of overheads Depreciation of assets Full cost of intangible assets (e.g. software) PwC 8

9 Horticulture Innovation Australia (HIA) Levies Should you be claiming the R&D portion of your HIA levies Co-funded projects You should be claiming the cost of participating in HIA projects (where those costs are not reimbursed) PwC 9

10 How can PwC help? Our national R&D team currently serves over 1000 clients in a wide range of industries, ranging from small, family-owned businesses to ASX 200 companies Our fees are capped, to ensure you always receive a benefit from the process We work with your existing tax accountant in preparing the claim documentation No claim = no fee Presence in SE Qld, Nth Qld & Northern Territory PwC 10

11 Other opportunities AusIndustry reviews Export Market Development Grants Grants (Entreprenuers Infrastructure Programme) PwC 11

12 Contact Daniel Knox Director, PwC Brisbane Imelda Alexopoulos Director, PwC Northern Australia PwC 12

13 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.