The R&D Tax Incentive provides big benefits to support businesses which do R&D, including cash refunds.
But first you have to spend on R&D – so why? Why should your company do R&D?
There are millions of companies in Australia and only a tiny fraction of them conduct R&D – less than 1%. But there are good reasons why you should consider adding your company to the innovative 1%.
Firstly, the Chief Economist has found that companies that persistently innovate grow faster and more consistently than those that don’t.
While there are many ways to innovate, Research and Development is crucial in delivering the full scope of benefits of a broader program of innovation. In particular R&D is the key way in which companies:
Develop fundamental knowledge. This often means exploring certain technologies that have potential for massive industry impact, but neither their intrinsic value nor practical application is known. Funding for this purpose is a fraction of the whole, but it is strategic, with little expectation for near-term growth or development.
Support business areas like business management, manufacturing, and customer satisfaction. Functions are more tangible and necessary, like looking for strengths and weaknesses or upcoming trends that allow the company to create new business opportunities. This work isn’t necessarily ongoing, but perhaps focused on a certain timeline or business area.
Create and implement new technologies. The output from this R&D arm can could be anything. Companies tend to see this R&D area as an investment instead of as a necessary operating cost, especially for short-term projects that are easier to measure and value.
As we have mentioned in previous posts, R&D is risky but delivers significant benefits, particularly to young, collaborative SMEs that are hungry for finance and skills.
R&D is good for your company and good for the Australian economy, to grow more smart companies with world leading ideas and products that create a ‘spillover’ of economic success. Rewarding companies willing to take the risks is why the R&D Tax Incentive was created and why it pays such a generous benefit.
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