If the answer to this question is YES then you must be one of the 0.1% of firms Australia wide that are accessing the governments Research and Development Tax Incentive (R&DTI) program. That will put you in the minority as a significant number of firms firms that can gain access to the R&DTI, currently do not do so. Why is that number so small and why don’t more organisations access the R&DTI?
One of your CFO's main responsibilities is to ensure that your company is financially stable and profitable. One way to achieve this is by identifying and taking advantage of any opportunities to increase revenue and reduce expenses. One such opportunity is the R&DTI, which can provide your company with significant financial benefits.
The R&DTI is a government-funded program that provides tax credits to companies that invest in research and development activities. The program is designed to encourage companies to invest in new technologies, products, and processes, which can lead to increased competitiveness and economic growth.
One of the main benefits of the R&DTI is that it can provide your company with significant financial savings. The program allows companies to claim a tax credit of up to 43.5% of their R&D expenditure, which can result in a substantial reduction in their tax liability or even a cash rebate depending on your total tax liabilities and turnover. This can free up cash flow, which can be used to invest in other areas of the business or to pay down debt.
Another benefit of the R&DTI is that it can help your company to stay competitive. By investing in R&D and generating new knowledge, your company can develop new products, services, and processes that can differentiate it from its competitors. This can lead to increased market share, higher sales, and improved profitability.
Furthermore, the R&DTI can also help companies to attract and retain talented employees. By investing in R&D, companies can create an environment that is conducive to innovation and creativity. This can help to attract and retain the best talent, which can further improve the competitiveness of the company.
In answer to the question we posed at the beginning of this article Why is that number so small and why don’t more organisations access the R&DTI? it is often because they have not properly understood the requirements of the program or that they have received very poor advice in relation to eligibility. The reality is that if your company is engaged in any form of innovation, then the extra steps required to turn those innovations into eligible R&D, is often quite simple and needs little more than good planning and an experiment.
It is very important that your CFO is looking at the opportunities presented by the R&D Tax Incentive Program. If they are currently not doing so, then they are doing the company a disservice. By taking advantage of this program, your company can benefit from significant financial savings, increased competitiveness, and improved employee retention. Furthermore, it's free money that is not conditional upon your R&D being successful and its yours to use for further R&D or to contribute to your companies bottom line and future success.
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