BUDGET 09-10: R&D windfall for small tech firms

Federal Budget delivers R&D windfall to companies with turnover of less than $20 million

The Federal Budget has delivered a research and development (R&D) windfall to companies with a turnover of less than $20 million.

The new R&D tax credit, which will replace the existing R&D tax concession effective from July 1, 2010, will provide greater benefit to eligible companies.

The new system provides a refundable credit of 45 percent of the R&D spend for these smaller businesses, an effective after-tax benefit of 15 percent as opposed to the 7.5 percent under the existing regime.

The new system has no qualifying limit so the R&D credits will apply from the first dollar of expenditure.

Deloitte Tax Partner and Telecoms Media and Technology specialist, Stuart Osborne says this should provide a huge boost to Australia’s grass roots technology companies.

"Typically, the R&D spend undertaken by these start-ups and smaller companies would generate tax losses which are of no benefit until the company makes a profit.

"Crucially, under the proposed scheme R&D undertaken by a company yet to turn a profit would get the R&D credit as a cash payment, effectively refunding part of the R&D cost," he says.

If a company, in tax losses, spent $250,000 on R&D today and they met the eligibility requirements around group turnover being less than $5 million, it would get a cash rebate of $93,750. From July 1, 2010, if the same company was in tax losses, and group turnover was up to $20 million, it will get a cash amount of $112,500.

"This is a much more targeted way of delivering the benefit to a larger number of companies which will be welcomed by the technology sector," says Osborne.

"Even for companies who are already profitable the new scheme will provide a greater benefit than that which already exists."

Subscribe to our newsletter

Sign up to receive the ATN e-newsletter, digital magazine and other offers we choose to share with you straight to your inbox

You can also follow our updates by joining our LinkedIn group or liking us on Facebook


Trucks For Hire | Forklifts For Hire | Cranes For Hire | Generators For Hire | Transportable Buildings For Hire