How I overcame the tax jargon and got the R&D tax incentive: Tools for your grab at the cash

Alex Martell from online wine community Vinus says he knew the federal government’s Research and Development Tax Incentives  would kick-start the growth of his business.

But like many small business owners and startup founders, Martell says he found the application confusing, time consuming and stressful.

“It was a very long process,” Martell tells SmartCompany, having taken on the task last year.

“It’s an 80 or 90 page booklet. Plus there is the uncertainly when you’re making a reasonably big claim. The last thing you want is not sleeping at night while the ATO decides whether or not to give you the money.”

“Then you also run the risk of not claiming enough, you become a bit too risk adverse.”

The R&D concessions available from the Australian government offer help to businesses by offsetting some of the costs of performing R&D related activities.

On top of the long application form, the process of applying involves writing a project plan to support your application, registering with AusIndustry and lodging the claim with your tax return.

Charmaine Chalmers, partner and national leader R&D at PwC, says many small businesses find the material in the application uses complicated technical terms and often left them unsure if their projects are even eligible.

“When I talk to small businesses, there is a large proportion that says, ‘We looked at it, couldn’t work it out and gave up’,” says Chalmers.

“Our research indicates there are three times the number of small businesses in Australia who are eligible than actually claim the R&D tax incentive.”

Martell says it took him three days to wade through the process with the aid of an accountant.

He eventually received an undisclosed rebate from the Australian Tax Office for his application for the further development of the company’s technology.

Martell says Vinus, an online wine and price-matching platform, used the money towards funding their automatic pricing app, which allows customers to snap a picture of a bottle of wine and instantly be given a deal for the best price.

The company had previously launched thanks to modest seed funding, but Martell says “as in the case of all funding, it always tends to take longer than originally anticipated”.

He says the R&D funding was crucial to keeping things moving a long quickly.

Martell has now applied for R&D funding again this financial year, this time with the use of Nifty, a tool launched this week by PwC.

He says the tool streamlined the whole process, this time taking just three hours.

Chalmers says the tool has the ability to transform the way small enterprises apply for the incentive, taking between 30 to 60 minutes to self-complete and giving a confirmation within 48 hours.

“It’s a huge improvement on the current process,” she says.

Martell says he’s also learned through the process to keep good records, and encourages those who think they may be eligible for R&D concessions to use Xero software, which is compatible with the ATO.

“It really helps that everything is stored correctly down the track,” he says.