Your SlideShare is downloading. ×
  • Like
KPMG presents Government Tax Incentives and Grants
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Now you can save presentations on your phone or tablet

Available for both IPhone and Android

Text the download link to your phone

Standard text messaging rates apply

KPMG presents Government Tax Incentives and Grants

  • 1,366 views
Published

delivered by Raisa Monteiro and Jonathan Turner

delivered by Raisa Monteiro and Jonathan Turner

Published in Business , News & Politics
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
1,366
On SlideShare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
143
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. R&D Tax Incentive &Government GrantsRaisa Monteiro andJonathan T ne TurnerJuly 2012
  • 2. R&D Tax Incentive
  • 3. R&D Tax incentive: overview • G Government’s principal measure t encourage i d t i t’ i i l to industry investment i research and t t in h d development • Long history in Australia: first introduced in 1986 • Several iterations of legislation: last one introduced in 2011 and applies to claims after July 1, 2012 • Jointly administered by AusIndustry and ATO • Based on self-assessment© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 2(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 4. R&D Tax incentive: who can apply? • A company incorporated under an Australian law: Traffica Pty Ltd • A foreign company incorporated under a foreign law that is an Australian resident for tax purposes: Google Australia Pty Ltd • A foreign company incorporated under a foreign law that is a resident of a foreign country with a double tax agreement with Australia: e.g. h a sales manager b not i has l but incorporated – A d Aptara – e-learning l i • Trusts are not eligible • Annual R&D expenditure must be over $20,000© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 3(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 5. Sixth Annual KPMG Private Companies Survey (May 2012)OVERVIEW• 500 respondents• CEOs, Directors, CFOs from Private Companies A 0%• 59% respondents consider their company a family business Head office location WA 11% NSW Annual turnover 2012 24% < $20 M 43.0% $21 M - $50 M 20.6% VIC 27% $51 M - $100 M 12.3% NT 5% % $101 M - $200 M 11.3% $201 M - $400 M 5.7% TAS QLD 7% 20% SA $401 M+ 7.1% 6%© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 4(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 6. Survey Question – R&D Tax Incentive Q.47 Are you claiming the R&D tax incentive? Q.47a Why are you NOT claiming the R&D tax incentive? Other 6% Yes 24% Not aware of it 20% Not applicable No to my business 76% 74%© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 5(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 7. Government and University of Queensland Innovation surveys© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 6(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 8. The benefits 45% refundable R&D Tax offset (cash refund) for eligible entities with a group turnover of < $20 million (no cap on R&D expenditure); and 40% non-refundable R&D Tax deduction for all other eligible entities. Example: XYZ Co. incurs $1,000,000 R&D expenditure: Company Size Benefit R&D Group turnover <$20m, in losses p $ , $ $450,000 cash , R&D Group turnover <$20m, paying tax $150,000 reduction in tax payable R&D Group turnover >$20m. $20m. $100,000 reduction in tax payable© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 7(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 9. Aggregated turnover - grouping rules • New grouping rules apply to access the refundable offset – calculating the $20 million threshold • Aggregated turnover is the sum of annual turnovers of: - R&D entity - A “connected entities” e.g. major investors, venture capital, fund managers Any “ t d titi ” , j i t t it l f d - Any “affiliates” • Exempt entities (e.g. universities) can control up to 50% of the R&D entity. The previous R&D tax concession capped exempt entities to 25% control or ownership. • C Connected entity t d tit - where either of two entities controls the other or both entities are controlled by a 3rd entity - An entity controls another entity, if the entity owns or has the right to acquire equity entity interests (i.e. options or convertible notes) in the other entity, carrying rights to exercise or control at least 40% of the voting power© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 8(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 10. When will I first be impacted? The R&D Tax Incentive applies to expenditure incurred in income years starting on or after 1 July 2011.© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 9(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 11. Definition of R&D activities: CORE activities Core R&D activities are ‘experimental’ activities • Outcome cannot be known or determined in advance on the basis of current knowledge, information or experience; • C only b d t Can l be determined b applying a systematic progression of work th t i d by l i t ti i f k that:  is based on principles of established science; and  proceeds from hypothesis to experiment observation and evaluation and leads experiment, evaluation, to logical conclusions; and • Conducted for the purpose of generating new knowledge (including knowledge about the creation of new or improved materials, products, devices, processes or services). • Some activities are excluded from being core, e.g. market research, sales promotions, software development for internal administration... administration...* *They may still be included as ‘supporting’ activities.© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 10(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 12. Definition of R&D activities: SUPPORTING activities Criteria for eligibility of supporting R&D activities requires that they be “directly related” to the core R&D activities. Importantly, if an activity… • is an excluded core R&D activity;* or • produces goods or services; or • is directly related to producing goods or services …then the activity is only eligible as a supporting activity, if it is undertaken for the “dominant purpose” of supporting th core R&D activities. “d i t ” f ti the ti iti * e.g. market research, market testing, sales promotion© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 11(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 13. Software R&D claim: what’s excluded/included? Excluded as a core R&D activity • developing, modifying or customising computer software for the dominant use of internal administration (including the internal administration of the business functions). Would not exclude: • in house software of an applied nature (e.g. firmware) in-house (e g • software activities undertaken to support a larger R&D project subject to the dominant purpose test • software developed for commercialisation to only a single customer with no further intention to commercialise  Multiple sale test has been removed© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 12(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 14. Routine developments versus R&D R&D: • D Development of a scientific/or t h i l advance l t f i tifi / technical d Routine development (no advance): • Debugging of systems • Maintenance and support activities for existing systems • Using a software solution in ways similar to previous experience • Implementation of an “out-of-the-box” solution© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 13(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 15. Where have we historically found ICT claims? • Internet software development where scale and complexity present p p yp technological challenges • New object representations or data structures (e.g. single customer view) i ) • Integration of technology, or generations of technology, not previously integrated • Integration of new technology with a legacy environment • D Development of i l t f improved d t centres d data t© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 14(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 16. Common issues in ICT claims Need to document the state of technology at the commencement of the project to demonstrate the novelty of your solution. Think of technologies which were highly novel at inception but have become widespread quickly: • Development of touchscreen technology for personal mobile devices • Application of voice recognition for intelligent personal assistant software (e.g. Siri) • Video streaming for live events on mobile devices g • Cloud storage services such as DropBox • Use of Voice over IP (VoIP) for instant messaging, voice and video (e.g. Skype) On the flip side, integrating “off-the-shelf” solutions into legacy platforms could require significant innovation: q g • Many developments are driven by current legacy environments • Software vendors typically promise the world© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 15(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 17. Common issues in ICT claims Use of standard development methodologies • Agile methods may have little or no documentation – take pictures, print whiteboard • Same methodology applied to routine software development and software R&D Testing: • Routine testing versus testing within the R&D experiment The “failure to understand factor for assessors: failure understand” • Complex jargon Cross border projects: p j • Who really is doing the core R&D, and what is it?© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 16(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 18. Test your understanding: is this an R&D activity? I’m changing the in house in-house general I’m developing software within  ledger devices that manage a production line All my test code is scrapped and never makes it into a  production environment – only the final version does I’m adding a module to an in-  I need some routine  changes to my backend house system for system to allow me to use b customers by t do my R&D only© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 17(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 19. R&D Expenditure Typically, R&D expenditure comprises : • Salaries & Wages • Supporting overheads • Contractor expenditure • Materials • Depreciation Everything needs to be substantiated and well documented© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 18(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 20. R&D tax incentive – KPMG involvement Identification of activities • Eligible R&D projects • Breakdown into core/support activities Calculations of expenses • Identify/collate eligible expenses Maximising your claim • Strategic approach • In-depth understanding of legislation Taking the pain away • Collating required paperwork, liaising with AusIndustry© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 19(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 21. Grant Funding
  • 22. R&D tax incentive versus grants R&D Tax Incentive Grants Retrospective Prospective Entitlement Competitive Cash payments for SME loss Co-contribution usually required making companies Require innovation, commercial Require innovation or high strategy, national benefit, need for technical risk funds d f d and proven management t Benefit against tax payable Grant income taxable© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 21(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 23. Survey Question - Government Grants Q. 48 To what extent are you accessing grant funding opportunities? Not applicable to my No limited awareness business 22% 27% Aware/accessing Not accessing 21% 30%© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 22(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 24. Considerations It’s not free money: time and resources are required. Grant programs are each uniquely different. There may be intellectual property implications for the project. From start to success may take a few months. F t tt t k f th Grants support specific projects and activities, you must have a clearly defined project. Think broadly when considering which grant suits your project. project© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 23(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 25. QLD state government grant update • All innovation and technology grant programs are currently on hold • State government continues facilitating industry/small business networking ( g Q g (e.g. Q-WIN for SMEs) ) • Australian Institute of Commercialisation programs are still active • ichoose – a tool that delivers individual business plans for digital growth in a business© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 24(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 26. Priority Funding Areas Grants are generally aligned with Australia’s national priorities. Key priority areas include: • Environment • National broadband network / Hi-tech economy Hi tech • Energy efficiency • Clean technology & renewables • Sustainability KPMG publication – Government grants and incentives • Innovation • Regional development • Discretionary funding KPMG publication – Australia’s Climate Change Plan: Summary of Assistance Packages© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 25(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 27. Commercialisation Australia Project must aim to produce or establish the commercial viability of, or commercialise a new, clearly defined, product, process, or service. • up to $50k Skills & Knowledge • 80:20 • Turnover < $10 m Assessment Criteria • up to $200k Experienced 1. Impact of funding • 1:1 Executives • Turnover < $10 m 2. Commercial plan & potential • $50k - 250k 3 M k opportunity 3. Market i Proof-of-Concept • 1:1 • Turnover < $10 m 4. Management capability • $250k - $1M 5. National benefits Early Stage • 1:1 (repayable) Commercialisation • Turnover < $20 m© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 26(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 28. Commercialisation Australia participants in ICT Company Project Grant amountMesaplexx Pty Ltd, Ultra compact, high performance filters for the $924,902Brisbane mobile telecommunications industryConnectiX Technologies Mobile productivity and workforce management $916,400 $916 400Pty Ltd, Sydney solutions for businessesPlayFi Pty Ltd, An innovative platform to stream and sell live $120,000Melbourne performances over the InternetSemantic Sciences Pty Sintelix, a software program which allows users to $50,000Ltd, Adelaide extract information economically, from millions of documents per hourProfessional Commercialisation of an online learning platform for $197,194Development (PD) smartphones and tablet PCsOnline Pty Ltd, Perth y ,Ingogo Pty Ltd, Sydney Ingogo.mobi peer to peer, corporate taxi booking and $250,000 payment system© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 27(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 29. Discretionary Funding • Potential funding outside official programs. • Oft combined with other grants (l Often bi d ith th t (leveraging f d l / t t l i federal /state level) l) • Target funds in the government’s operating budget for use at g g p g g Department or Ministerial discretion. • Require direct approach by the applicants who have a good business case for a project that meets the government’s overall objectives, strategy and grants policy.© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 28(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 30. Grant opportunities – KPMG involvement Identification • Matching current / future funding opportunities to activities • Multiple jurisdictions Coordination • Preparation, drafting, editing, review, support documentation • Tax, audit, management assistance for the review process Discretionary • Direct government approach – national reach or significant economic benefit projects Project Management • Manage business projects to deliver defined, measurable outcomes • Scaled-up assistance across p j p project life-cycle y© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 29(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
  • 31. Contacts Thank you Raisa Monteiro Jonathan Turner Manager – R&D Incentives Director – R&D Incentives rmonteiro1@kpmg.com.au jturner5@kpmg.com.au Ph: 07 3233 9482 Ph: 07 3225 6888 KPMG’s Tax practice is not licensed to provide financial product advice under the Corporations Act and taxation is only one of the matters that must be considered when making a decision on a financial product. You should consider taking advice from an Australian Financial Services Licence holder before making any decision on a financial product. The information contained herein is of a general nature and is not intended to address the circumstances of any p g y particular individual or entity. Although we endeavour to p y g provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.© 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 30(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks ofKPMG International. Liability limited by a scheme approved under Professional Standards Legislation.