Home Forums Money matters R&D tax incentive

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  • #1000051
    Pol L
    Member
    • Total posts: 5

    hi – we are a small firm in manufacturing , doing some pretty innovative things. has any one used the R&D tax grant scheme before ? Is it worth it ?

    – Pol

    #1222496
    Paul – FS Concierge
    Moderator
    • Total posts: 3,121

    Hi and welcome to Flying Solo.

    Hopefully, somebody will be along with their srory.

    Cheers

    #1222497
    Pol L
    Member
    • Total posts: 5
    Paul – FS Concierge, post: 268847, member: 78928 wrote:
    Hi and welcome to Flying Solo.

    Hopefully, somebody will be along with their srory.

    Cheers
    Thanks. Hope so.

    #1222498
    JamesMillar
    Participant
    • Total posts: 1,675
    Pol L, post: 268863, member: 116791 wrote:
    Thanks. Hope so.

    If you like free money then I would say yes.

    #1222499
    Pol L
    Member
    • Total posts: 5
    JamesMillar, post: 268866, member: 5318 wrote:
    If you like free money then I would say yes.
    Thanks James. I’ve heard some horror stories on the amount documentation that needs to be kept and the audits that are done. You know small businesses don’t have the time to keep tons of docs…
    Is this scheme more for the big end of town ?

    Cheers!

    #1222500
    JamesMillar
    Participant
    • Total posts: 1,675
    Pol L, post: 268875, member: 116791 wrote:
    Thanks James. I’ve heard some horror stories on the amount documentation that needs to be kept and the audits that are done. You know small businesses don’t have the time to keep tons of docs…
    Is this scheme more for the big end of town ?

    Cheers!

    Yes there are some decent documentation requirements around registration, projects and claiming. And no its not just for big end as there are plenty of micro businesses that claim the concession. As a matter of fact the scheme was changed several years ago to provide an immediate tax rebate to help small businesses which previously never existed (originally the concession just provided an uplift to deductions and losses which were only valuable if recouped by long term profits – which not every company made). To give you an idea of scale – you only need $20k plus in eligible R&D expenditure to make a claim.

    Best of all there are plenty of advisers and accountants that you can offload much of the responsibility to. Of course you can expect to pay for this service. Just beware of the ultra low cost options because you will find they are generally higher risk and the risk falls on your shoulders as the taxpayer.

    So in my opinion if the benefit of the claim exceeds the cost of the claim then its a no brainer.

    #1222501
    splint
    Member
    • Total posts: 1

    I’ve not had any personal experience with this but I spoke to someone a while back who has and what has been outline in this thread is consistent with what he told me. He concluded that the hoops you have to jump through make it nonviable for smaller businesses. He was a bit vague on where it became viable but he did say it puts a lot of stress over and above the normal workload and even when you invest all the time into gearing up to meet the requirements and applying there is still no guarantee you will get a grant.

    #1222502
    JamesMillar
    Participant
    • Total posts: 1,675
    splint, post: 269267, member: 117464 wrote:
    I’ve not had any personal experience with this but I spoke to someone a while back who has and what has been outline in this thread is consistent with what he told me. He concluded that the hoops you have to jump through make it nonviable for smaller businesses. He was a bit vague on where it became viable but he did say it puts a lot of stress over and above the normal workload and even when you invest all the time into gearing up to meet the requirements and applying there is still no guarantee you will get a grant.

    That’s why you hire professionals to handle things for you. Chances are your friend that has a business is not an expert in R&D incentives which is why it’s completely unviable for him learn and complete himself. It may well still be beneficial for him to claim after all costs. It’s self assessment and it’s not a grant. So it is actually guaranteed if you lodge and application and self assess that you are eligible.

    Your friend just doesn’t understand. Not a reflection on the system.

    #1222503
    Henri K
    Member
    • Total posts: 30
    JamesMillar, post: 269268, member: 5318 wrote:
    It’s self assessment and it’s not a grant. So it is actually guaranteed if you lodge and application and self assess that you are eligible.

    Sure, you can self assess yourself to be eligible, but ATO audits companies even half a decade later, and claws back, sometimes with penalties, whatever it wants.

    When I considered the R&D incentive, I found so many horror stories that I decided it’s not worth the effort+risk vs reward. There is even an ombudsman inquiry against the ATO R&D clawbacks.

    #1222504
    JamesMillar
    Participant
    • Total posts: 1,675
    Henri K, post: 269281, member: 115510 wrote:
    Sure, you can self assess yourself to be eligible, but ATO audits companies even half a decade later, and claws back, sometimes with penalties, whatever it wants.

    When I considered the R&D incentive, I found so many horror stories that I decided it’s not worth the effort+risk vs reward. There is even an ombudsman inquiry against the ATO R&D clawbacks.

    Did you look into hiring someone to manage it for you and reduce the risk at the same time?

    #1222505
    Henri K
    Member
    • Total posts: 30

    I evaluated the whole: my effort for registration, accountant fees for guiding through registration, rough probability of audit, the required effort in case of an audit, rough probability of clawback etc VS the alternative of not lending money to the company during R&D phase, not paying salary to myself, not paying taxes, not paying medicare levy, not paying super, but instead living from savings.

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