The Australian government offers over 1,200 grants and incentives which aim to support the growth of businesses throughout the country. However, many companies are unaware of the grants to which they are entitled, or are unsure of how to successfully apply for them. The result is that each year many businesses are losing out on beneficial financial support.
One of the grants on offer is the R&D Tax Incentive; this is a government entitlement program which each year helps over 10,000 innovative businesses to grow in their research and development activities.
The incentive provides a 45% refundable tax offset to eligible companies with annual aggregate turnover of less than $20 million and a 40% non-refundable tax offset to all other eligible companies.
The criterion for eligibility is relatively straightforward: any company that is investing significant resources to create something new for the market be it a process, product or service may be entitled to the incentive.
The incentive is available to businesses of all sizes across all sectors, as one small company working in the oil and gas sector found. The business secured the R&D Tax Incentive in order to offset some of the costs of their R&D. The company designs and manufactures an innovative safety clamp for securing bundles of casing and drill pipe that require slinging to and from mobile offshore oil and gas drilling units or installations.
Following significant R&D, the product was trialled in the field and proved safe, durable and easy to use.
The company has successfully claimed back more than 50% of its total R&D expenses over the past three years which has had a significant impact on the company’s bottom line. The company is expected to become profitable next year.
The company directors were also made aware of other grants to which they were eligible and they applied for the Export Market Development Grant (EMDG).
In order to access the worldwide oil and gas market the company invests time and money in establishing overseas distribution channels, travelling overseas to pitch to large multinationals and have undertaken a large number of overseas promotional activities.
The EMDG program allows Australian companies turning less than 50 million dollars to subsidise eligible costs at a 50% rebate; this is up to $300,000 per annum over a 7 year period.
“People don’t realise what’s available to them. If it hadn’t been for the grants we would be struggling. The design work, consulting work and prototyping all costs money; it helps to get back some of what you’ve put in” the company’s co-founder said.
We have also been successful in obtaining other grants for clients. Enterprise Connect’s TAS grant is one example where eligible businesses are able to apply for a business review and obtain funding for a grant to cover 50% of the cost of business planning prepared by an advisor (up to $20,000).
The Commercialisation Australia grant is another common grant and is a “…competitive, merit-based assistance program offering funding and resources to accelerate the business building process for Australian companies, entrepreneurs, researchers and inventors looking to commercialise innovative intellectual property.” It comes in 4 stages:
- Skills and Knowledge
Up to $50,000 to access specialist advice and services
- Experienced Executives
Up to $350,000 to engage a CEO or other senior executive
- Proof of Concept
$50,000 to $250,000 to prove the commercial viability of new IP
- Early Stage Commercialisation
$50,000 to $2 million to take a new product, service or process to market
If you are interested in learning more about any of the opportunities on offer please contact your NKH Business Advisor.
Thank you to our R&D partners, Insight Business, for their contribution to this article.