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I'm a consultant in the R&D Tax space. The press release relates to an advanced finding, which is an advanced approval of R&D activities. It does not however gu
by Innercode 11y ago
I'm a consultant in the R&D Tax space. The press release relates to an advanced finding, which is an advanced approval of R&D activities. It does not however guarantee approval for the amount of expenditure they would be claiming. A tax refund of that size would naturally attract the attention of the Australian Tax Office(ATO). The press release is also dated before they could submit their tax return to obtain a 14/15 refund. A key problem with the press release is that there is now a $100million cap on how much expenditure they can claim in a financial year, so theoretically their maximum benefit would be $45million.
$120million in software R&D is a very large spend in Australia for one year, Google Australia for example claims about $40-$50million in R&D spend each year. Atlassian and some of the larger banks would claim a similar amount. I have not heard much about DeMorgan before, however if it all checks out they would be one of the most significant powers in the Australian tech space.
- robzyb 11y agoFellow Australian here (albeit currently living in Tokyo). The "We create tax refunds" part of your homepage says that a company can get a tax refund even if there is no sales. Does this mean that if I establish a company tomorrow, invest $100k of capital, and spent $100k of capital on R&D, then the ATO will give my company $45k?
- ps4fanboy 11y agoYes, you have to spend the money though so youll still be down 55K, it doesnt count to things like capital purchases.
- gordjw 11y agoDepends who owns the company you spend the $100k with. They'd need to pay 30% tax on their income, leaving a net outlay by the government of $15k (15%) overall.
- robzyb 11y agoTheir income would be less than the $100k. They would have incurred expenses when they provided the services. I paid $100k, the provider took the $100k and spent $60k. This means they declare $40k income. The company pays $12k tax. The Goverment gives $55k to my hypothetical company.
- Innercode 11y agoThe R&D Tax Incentive was designed to give a cash benefit for startups who have little tax to pay. So your example is correct for a pre revenue entity, assuming no outstanding tax liabilities. Its an entitlement scheme, so as long as your doing R&D, have a company and spending your money through the company, you will get the benefit of the scheme. It is one area that Australia has a significant advantage over the US for startups.
- flashman 11y agoAndrew or David? We've done some work with you before (Vector 5).
- Innercode 11y agoStill working for Vector 5! Cheers, Andrew