Claiming R&D for a Tech Company
Many technology companies believe that they should have a dedicated R&D team or laboratory to claim that they have conducted R&D activities. However, it easier now more than ever for companies, especially technology companies that deal with software, to undertake R&D activities without needing to invest in a laboratory or form an R&D team. The technology sector is synonymous with innovation, and by default, grows faster than most industries. The most visible growth of the technology sector this year and the previous one can be found in areas where the pandemic left a big impact. Technologies that make working from home or attending online classes possible are very much in demand and require a lot of R&D to increase their accessibility and efficiency. As the chances of conducting R&D in the technology sector are also significantly higher, eligible companies should take advantage of the R&D tax incentive program because it can provide up to 43.5% refundable tax offset depending on your aggregated turnover.
The Australian Government wants to encourage all companies (in technology field or not) to conduct experimental R&D activities benefiting Australia that might not otherwise be undertaken for reasons such as budget or complexity. If your technology company is developing a new process of creating a product or undertaking steps to improve current state-of-the art methodologies despite scientific and financial difficulties, then you may be eligible for an R&D tax incentive.
It is essential that technology company understand that the claim is based on the activities of a project rather than the project in its entirety. If a project is innovative and/or novel but the activities involve to realise it is not, then R&D tax incentive cannot be claimed. An R&D activity is composed of the main activity which is called core activity, and an activity that directly supports it aptly called supporting activity. A supporting activity can still be claimed if the related core activity finds to be ineligible. However, activities conducted primarily to improve internal business administration are excluded from being valid activities even if they are innovative or novel and are conducted for the purpose of generating new knowledge. Moreover, any activities that pertain to testing, data mapping, data manipulation, data migration, technology upgrade, digital transformation activities, automating reporting or recording system, and routine maintenance cannot be claimed as core activities. In any case, these activities may be eligible as supporting activities if they directly support a core activity.
We at Innercode can help you assess whether your AR and VR project activities fall as R&D activities and guide you into maximising your claim. Innercode is composed of dedicated government grants consultants specialising in the R&D Tax Incentive for the software and technology industry. We have many fruitful years of experience delivering R&D Tax incentives to many software and tech companies. Through our streamlined process of analyzing claims, we are confident that we can help you determine your eligible projects and activities in just a few hours of your time.