Leverage R&D grants to excel the development of projects

06 October 2021 Consultancy.com.au 3 min. read
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Machinery, software, staff, and manufacturing are commonly perceived as costly investments for start-ups or to improve an existing product. It can seem overwhelming at first but there are several ways to receive funding for a next project.

Research and development grants (R&D) are leveraged across thousands of industries and help businesses and startups in a variety of ways who are developing new products, services, processes and materials.

Who is eligible for R&D grants?

Many countries offer these grants around the world. Jason Hood, CEO of R&D tax incentive firm BourkeHood, explains that all industries are eligible for R&D grants.

Jason Hood, CEO of BourkeHood

“R&D isn’t just for scientists or innovative cosmetic formulations. Whether you are an established dentist or a new software startup, R&D grants can make a huge difference in the life of your company.”

“Companies can file claims for expenses such as employee and contractor costs, vehicle expenses, IT, equipment rental, and even internet hosting. When an R&D claim has been made correctly, companies can typically recover $50,000 to $1,000,000,” explains Jason.

The claim does not have to be about the success of the project. Jason says that it is more important to detail the journey and lessons learned than to highlight the successes. “The assessor would like to see the entire journey of your project. They want to see the obstacles and what you did to overcome them.”

International R&D grants

R&D can be done at an international level with each country having its own rules regarding tax incentives. “When you think about R&D at an international level, it is important to consider where the parent company lies,” says Jason. “R&D in Australia is set at a rate of 43c per dollar with a cap of $20 million for SME. The rate and cap of R&D vary from country to country, with New Zealand and the USA having no limits on the amount that can be claimed.”

The tax and research & development expert recommends that businesses research the guidelines for their country before starting a project, “because not all countries allow you to spend R&D grant money offshore.”

What is used in the application?

To ensure eligibility for R&D incentives and a successful application, it is important to keep accurate and current records.

“Keep your project management records which includes your strategy roadmap, pivots, meeting minutes, milestones, and any other plans that you may have made but didn't materialise. Your financials, including costs, profits, staff and contractor hours. The more information you have, the easier it will be to fill out an application and the more you can claim,” says Jason.

Who should make the claims for you?

According to Jason, the best route for applying for a grant is through a specialist or assessor that has the knowledge and experience to help a business write the claim and “who is able to explain what you are entitled to.”

“Applying through your accountant or an internal team member might cost you in the long run as the ATO will be looking for specific information and you might miss out on funding if you don’t have experience with R&D grant applications.”

“R&D can help your company speed up the development of your product or service. Don’t forget to remember that R&D grants are granted by the government who in turn want the economy to grow so they in fact want you to apply.”