R&D Tax Incentive

Summary of Australian Grants for R&D-Focused Businesses

Summary of R&D / RDTI grants

In this article we’ll provide you with a summary of grants, including the major ongoing grants and programmes at the federal level (and some links to state-level offerings) for R&D-focused businesses, so that you can make better informed decisions about your business’s innovation strategy.

The R&D grants and programmes we will cover in our summary of grants are probably the easiest to access and most applicable to a broad range of businesses, so please keep reading to know more about the following:

  • R&D Tax Incentive (R&DTI)
  • Export Market Development Grant (EMDG)
  • CSIRO’s SME Connect programmes
  • Entrepreneurs’ Programme (Accelerating Commercialisation)
  • ARENA — Advancing Renewables Programme

R&DTI

The fact that the federal government spends around $2 billion annually on this programme should give you an indication of how relatively easy it is for businesses to access. One of the big attractions for pre-revenue startups doing experimental R&D to develop a new product, process or service is the R&DTI’s tax offset (18.5% plus the company tax rate from 1 July 2021). So for entities with an aggregate turnover of less than $20 million per annum, if you have $100,000 eligible R&D expenses, you’ll get a $43,500 offset, which could be a cash refund up to this amount if you have no tax liability.

As long as your R&D followed a systematic progression of work based on the principles of established science that intended to generate new knowledge (i.e. in the form of a new or improved material, product, device, process, or service), and you can show how the experimental steps were focused on proving the hypothesis of your R&D project by generating results and observations that led to conclusions about whether the hypothesis was proven or not, then you’ll likely be eligible for the R&DTI.

Although there are some guidelines of the R&DTI that limit certain activities within certain industries (e.g. aspects of mining and R&D related to social sciences), the R&DTI is probably the program that R&D-focused businesses in Australia are most likely to benefit from, given that it is easily accessible and ongoing from year to year. Applications must be submitted within 10 months of the end of your company’s financial year (30 April for most Australian companies). See how we can help here.

Export Market Development Grant (EMDG)

The EMDG is in a transition phase: as of 1st July 2021, it became an entitlement-based grant programme, replacing the previous reimbursement scheme. However, both the old reimbursement scheme and the new programme will run concurrently during the 2021–22 financial year, so if you have eligible export expenses incurred before 1st July 2021 you can still submit an application for reimbursement up until 30th November 2021.

Here is a summary of the most important points of the new EMDG:

  • Online application process
  • Three different Tiers in the grant (see below for more details)
  • Ability to apply once for a grant of a combined 2 or 3 years (length depends on your Tier classification)
  • Turnover requirement to determine eligibility has been reduced from $50 million to $20 million
  • Greater certainty, because you will now know up front how much funding you will receive over the 2 or 3 years of the grant agreement, which will aid in export strategy planning

Tier 1: For first-time exporters — claim up to $40,000 per year for 2 years
Tier 2: For expanding export promotion activities — maximum of $80,000 per year for 3 years
Tier 3: For expanding export promotion activities and making a strategic shift (e.g., targeting a new market or new type of customer) — maximum of $150,000 per year for 3 years

Regardless of the Tier that applies to you, as part of any EMDG agreement you will be required to spend at least an equal amount of your own money on eligible expenses.

If you want an easy way to financially visualize the above information so you can plan your export strategy, here it is:

Over 8 financial years (e.g. Tier 1 + Tier 2 + Tier 3, but doesn’t have to be consecutively) you can receive up to $770,000 (providing you spend the same dollar for dollar amount) to help establish and then build your presence in foreign markets.

CSIRO’s SME Connect programmes

CSIRO’s SME Connect has three levels of matched-funding grants for research projects and researcher placements for SME businesses of various sizes. To encourage you to think about possible R&D scenarios for your SME, reflect on this: with the right planning you could be leveraging CSIRO-assisted R&D to help improve and grow your business with up to $575,000 dollar-for-dollar funding as you progress through the various SME Connect programmes over a 5–6 year period (combination of CSIRO Kick-start, Innovation Connections, and STEM+Business). If you’re a startup developing your MVP, then the CSIRO Kick-Start is probably going to be your starting point, given the eligibility requirement of annual turnover and operating expenditure of less than $1.5 million in the current and each of the last two financial years OR having been a registered company for less than 3 years. The CSIRO Kick-start can contribute between $10k and $50k matched spending for a CSIRO researcher to assist in an R&D project to research/develop/test a technology/product/service.

Entrepreneurs’ Programme

Businesses in targeted growth sectors (advanced manufacturing; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology, and services; or oil, gas, and energy resources) who want assistance to grow and enter new markets are eligible to apply for the federal government’s Entrepreneur’s Programme (EP) — Innovation Connctions. Your annual turnover or operating expenditure — for the current or one of the two past financial years — must be between $1.5 million ($750,000 for remote Australia or northern Australia businesses) and $100 million.

Under the Innovation Connections stream, EP’s consulting team (approximately 170 specialists around the country) includes many ex or current business owners, and they help hundreds of scale-up businesses across a variety of growth industries each year, by providing advisory, impartial counsel, consulting, international connections, and access to government grants and their networks for exporting. Innovation Connections has 2 key stages:

  • facilitation stage, which connects you with a facilitator
  • grant stage, to fund your researcher placement.

Your facilitator will work with you and give recommendations for your business and potential research project.

The Accelerating Commercialisation service of the EP provides small and medium businesses, entrepreneurs, and researchers with access to expert advice and matched project funding of up to $1 million for eligible applicants, to help get a novel product, process, or service to market.

ARENA — Advancing Renewables Programme (ARP)

Although this grant is not as general as the others mentioned above, we’ve included it in this article because there will be a lot of R&D work surrounding renewable energy in the coming decades. The Australian Renewable Energy Agency (ARENA) administers the ARP, which is continuously open for applications that address its investment focus areas:

  • Optimising the transition to renewable electricity
  • Commercialising clean hydrogen
  • Supporting the transition to low emissions metals

Funding from the federal government for ARENA Grants has been allocated up until 2032 (an additional amount of $1.62 billion was pledged in the 2020-21 Federal Budget). Grants are expected to be between $100,000 and $50 million, and applicants are normally be expected to at least match the funding being sought from ARENA.

Other federal grants and assistance programmes

There are many more grants and assistance available at the federal level, including the following that you may want to investigate to see if they are open for applications (some have funding rounds) and align with your specific situation:

  • Defence Innovation Hub
  • Business Growth Grants
  •  Modern Manufacturing Initiative

Besides the grants at the federal level that we’ve covered in this article, the states listed below have certain R&D grants, incentives, and programmes (please note that many opportunities may currently be closed for applications but subsequent funding rounds could open up at any time) so click on the appropriate state to see if there’s anything worth pursuing for your situation:

New South Wales
Victoria
Queensland
South Australia

Fullstack is proud to help businesses involved in Australian R&D continue moving onward and upward. We have the knowledge and expertise to keep you on the right path by ensuring you receive the right advice and all the grants, incentives, and rebates you’re entitled to.

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