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Machinery, software, employees and production are commonly seen as costly investments for start-ups or to improve an existing product. It may seem overwhelming at first, but there are several ways to raise funds for your next project.
Research and development (R&D) grants are used in thousands of industries and help businesses and start-ups develop new products, services, processes and materials in a variety of ways.
Who is eligible for research and development grants?
Many countries offer these grants around the world. Jason Hood, chief executive of R&D tax incentive company BourkeHood, explains that all industries are eligible for R&D grants.
“Research and development is not just for scientists or innovative cosmetic products. Whether you’re an established dentist or a new software startup, R&D grants can make a big difference to your company’s life.”
“Companies can claim expenses such as staff and supplier costs, vehicle costs, IT, equipment hire and even internet hosting. Companies can typically recover between $50,000 and $1,000,000 when an R&D application has been submitted correctly,” explains Jason.
The claim does not have to be about the success of the project. Jason says it’s more important to detail the journey and lessons learned than to highlight successes. “The assessor would like to see the whole journey of your project. They want to see the obstacles and what you did to overcome them.”
International grants for research and development
Research and development can be conducted internationally, with each country having its own tax incentive rules. “When thinking about R&D internationally, it’s important to consider where the parent company is located,” says Jason. “R&D in Australia is set at 43c in the dollar with a cap of $20 million for SMEs. The R&D rate and cap varies from country to country, with New Zealand and the US having no limits on the amount that can be claimed.
A tax and research and development expert recommends that businesses check their country’s guidelines before starting a project, “as not all countries allow R&D grant money to be spent abroad.”
What is used in the application?
Keeping accurate and up-to-date records is important to ensure eligibility for R&D incentives and a successful application.
“Keep project management records that include the strategy plan, key points, meeting minutes, milestones, and any other plans you may have created but not implemented. Your finances, including costs, profits, employees and supplier hours. The more information you have, the easier it will be to fill out the application and the more you can claim,” says Jason.
Who should make claims for you?
According to Jason, the best way to apply for a grant is through a specialist or assessor who has the knowledge and experience to help the business write the application and “who is able to explain what you are entitled to”.
“Applying through an accountant or in-house team member can cost you in the long run as the ATO will be looking for specific information and if you don’t have experience in R&D grant applications, you could lose funding.”
“Research and development can help your company accelerate the development of your product or service. Don’t forget to remember that R&D grants are awarded by the government, who in turn want the economy to grow, so they actually want you to apply.”
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