The financing for any business is the toughest part of running the business. It is relatively easier to deliver quality goods to your end customer, than, having to get time-critical finances for your projects and business. But, if your company is working on research and development activities, then you need not worry about your finances. This is because the government of Australia has come up with a scheme that will help manage the finances of such business. One such scheme is called the R&D tax finance.
The R&D tax finance is short means, that your business activities will be financed by some external company/agency. But this comes with a set of terms and conditions. Read on to know more about the R&D tax finance option.
This scheme is started by the Australian government as a joint venture with the AusIndustry (This runs on behalf of Innovation Australia). This scheme was started mainly to encourage the companies that are working on research activities – this helps in the economic growth of the country, which in turn helps in good capital creation for the country.
To avail the R&D tax finance – means to avail the benefit of being funded by another company/agency, your company should classify as an R&D company. How do you qualify for this activity?
1. Your company/project should be working on research activities – which are purely technological and scientific in nature.
2. The results of your research activities should not be known to the general public and it should also not be easily deducible to equally competent technicians.
3. Your project/business should be registered with the AusIndustry.
If your company meets all of these conditions, then you are eligible to avail the R&D tax credit from the government. The tax credit is a monetary benefit that you can avail. This helps to cover the cost of your business. The amount that you spend on staff, material, contractors, sub-contractors, softwares etc., can be re-covered from the government with the help of this R&D tax credit facility.
But you can avail this facility only after you qualify for the benefit. But before this time, if your business needs finances to run efficiently, you can avail the R&D tax finance. This means that there are some legal entities which are ready to finance your operations. The R&D tax finance comes with a set of terms and conditions. These agencies finance your project with a particular fixed rate of interest. The terms and conditions of the financing depend on the type of research you are undertaking. Make sure that you read all the terms and conditions of the R&D tax finance thoroughly before going in to an agreement.
You can repay the amount to the parent/funding company only after you get the R&D tax credit from the government. This helps you to run your business efficiently without having to worry about the financing part of it.
