Research and development (R&D) is a valuable tool when expanding and improving your business operations. Businesses that have a proper R&D strategy in place have a greater chance of success opposed to businesses that don’t, and lead to an increase in innovation, productivity and give your business an edge over your competition.
R&D involves researching your market and your target customer’s needs and then developing new and improved products and services to fit these needs. In this article, Global Research Institute dive into how an effective R&D strategy can boost your business operations and give an overview of how R&D is a useful addition to a tax return.
How Businesses Benefit From R&D
Broadly speaking, having a team of people with diverse perspectives, skills, and ideas can provide a more nurturing environment for problem solving and innovation. There are a multitude of businesses – SMEs and larger enterprises alike – that can gain a competitive edge over their competition through good R&D, while being able to cut marginal costs and improve productivity.
The benefits of R&D are often considered a long-term investment, so it’s important to remember that you may not always see short-term results or profits. As well as product development and improvement, R&D can help you develop more efficient processes and new ways of delivering services.
Depending on the size of the business, an R&D strategy can vary. Larger businesses are usually able to dedicate more time and resources to R&D to introduce new products and procedures as well as improve existing ones. Whereas small businesses tend to focus more on product improvement because of budget and cost limitations.
Businesses also benefit from R&D as it offers many opportunities to generate new or enhanced streams of income, and seek public-sector innovation, research and development grants for additional support.
R&D Tax Incentive
The Research and Development Tax Incentive (RDTI) offers a tax offset for companies that are eligible R&D entities.
For a company to register as eligible, it must be resident in Australia, either due to incorporation or through a significant economic connection. A company that is resident in another country is also eligible as an R&D entity if it is an Australian resident for income tax purposes, or resident of a country that has a double tax agreement that includes a definition of ‘permanent establishment’ with Australia.
The RDTI provides significant support to both Australian and offshore companies who conduct R&D activities in Australia. It is calculated by applying the relevant premium rates to the total amount of eligible R&D expenditure for the financial year and then deducted from the income tax liability.
The RDTI has been monumental in helping businesses of all sizes, from a wide range of fields, innovate and expand their operations. From creating biological alternatives to harmful pesticides, to needle-free vaccines, the R&D tax incentive has helped businesses attract further investments from all over the globe and boost their chances to collaborate with other entities, universities or organizations.
Find Out More About R&D Customers
The Global Research Institute is passionate about furthering innovation across economies, standards of living, environmental sustainability, health and in any other sector we find possible.
More and more countries around the globe are investing into businesses that partake in R&D activities as it’s well understood that it leads to new, innovative ideas that deliver from an organizational, economic, geopolitical and environmental context.
If you’re planning to undertake R&D, or currently engaged in R&D, Global Research Institute will help you through every necessary step that’s required when undertaking a project. For more information, visit our website and sign up today!
