What is R & D Tax Credit Finance?

R&D Tax Credit Finance

Companies working on research and development are the need of the hour. They help in the development of a strong economy. To encourage such companies, the Australian government has come up with the initiative called the Research and Development tax incentive. This is an enhancement over the Research and development tax concession which was available till mid-2011. Read on to find out more about this.

What is R & D Tax credit?

As the name indicates, it is a tax credit that is provided to the companies that are working in the Research and development sectors. The main purpose of providing this incentive is to help companies and business to undertake research and development activities – which they would not have undertaken otherwise and to provide incentives to run the business with less complications. This program is a joint venture of ATO and the AusIndustry to help creative research and development of the economy.

Eligibility Criteria:

If your company is working on research and development of technology – whose outcome is difficult to be determined, then you stand a chance to avail this facility.

Your project activities move from experiments, leading to the observation, evaluation and then some logical conclusions. These types of activities involve high risk, since the outcome is not certain. Such activities – which are governed by the principles of established sciences and technologies are eligible to avail this benefit. These activities should also be helpful to the larger masses of the population and not for the benefit of one person/company/organization.

Tax offset:

If your company satisfies the eligibility criteria, then you can also claim the tax offset under the R & D tax credit incentive. There are two important things to consider about the R & D Tax credit offset:

1. Whether or not you are governed by the exempt entity.

2. If your turnaround is greater than 20$ million.

These two are the determining factors for your tax credit incentive.

Tax Credit Finance:

a. What is R & D Tax credit finance?

Since R & D activities are subjected so many uncertainties, it is difficult to sustain in this business. But now, there are a large number of institutions which come forward to finance your R & D activities. But while considering the Tax Credit Finance, it is important for your company to consider some important terms and conditions of financing. It is also important to verify that the charges levied, interest rate of the finances and the general terms and conditions; meet the specific need of your research and development activities.

b. How does it help your company?

When the Research and development activities receive such financial aid- in the form of R & D Tax credit finance, it helps the company to:

o Involve greater in research activities by not worrying about the capital raising options.

o Invest more resource and time into such activities.

o Advance technology and its uses to develop products commercial in nature and are useful to the larger sections of the society.

Leave a Reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest

Share This