R&D Incentives and Grants

In the competitive world of manufacturing, business owners and executives are often frustrated by the speed of commercialising ideas. We use a practical and commercial approach, working with business to accelerate your business growth. Our team have worked within manufacturing and research organisations for many years and use their extensive experience, research and insights to develop methods and tools to simplify commercialising an idea. 

Build it bigger, better, faster

The faster you can develop and commercialise your ideas and bring them to market, the greater your competitive advantage and the more likely you are to be successful and grow your business and your market. Equally important is how you recognise, value and protect your valuable intellectual property (IP). 

We can help you

• increase the pace of innovation by increasing your innovation capacity and improving performance.
• keep you and your teams aligned and solutions focused. 
• identify collaborative research opportunities with universities and research service providers.
• develop your innovation and IP strategy – boosting innovation and accelerating your organisation’s efforts to grow towards the future.

KPMG’s R&D Incentives & Grants team specialises in helping industry understand and access government incentives. 

For instance, the R&D Tax Incentive is the government’s principal program to support businesses to invest in R&D. It provides R&D tax offsets over and above the applicable tax rate where the amount you receive depends on a range of factors (e.g. entity type, ownership and turnover, level and location of R&D being undertaken, etc.). As a result, the benefit could be as much as a cash refund of 43.5 percent on the eligible R&D spend through to an 8.5 percent tax credit where the business is large, and its R&D spend is low. We can help you understand and access this support, including for technology-based improvements to processes, products and services that are often overlooked as they occur outside traditional product development or R&D departments.

Additionally KPMG can assist with advice and support in planning and applying for each of the following tax incentives:

Are you maintaining adequate documentation to support the eligibility of your R&D trials? You often can't solely rely on existing production or operational systems to substantiate R&D intentions or the experimental nature of your activities.

Ensure you are correctly applying the feedstock provisions to your unique situation. Consider if an adjustment should be made when crops, livestock, or materials are processed into products for sale during the course of R&D activities.

Consider what an appropriate sample size for your R&D project should be and ensure there is a link between registered activities and the associated expenditure claimed.

Are you maintaining adequate documentation to support the eligibility of your R&D trials? You often can't solely rely on existing production or operational systems to substantiate R&D intentions or the experimental nature of your activities.

Ensure you are correctly applying the feedstock provisions to your unique situation. Consider if an adjustment should be made when crops, livestock, or materials are processed into products for sale during the course of R&D activities.

Consider what an appropriate sample size for your R&D project should be and ensure there is a link between registered activities and the associated expenditure claimed.

It can be difficult to determine the extent of the eligible R&D activities in development and production environments – where the R&D ends and business as usual begins?

The specific exclusion for exploration-type activities should be considered when undertaking R&D in a mining or prospecting context.

Depreciation can form a large portion of R&D expenditure where heavy plant and equipment is involved. By developing a system for apportionment and adjustment of tax asset registers where required, these costs can be captured in a simple and traceable way.

Consider how core R&D activities are distinguished from routine engineering processes, and how well these differences are documented? It is important that you can substantiate the iterative and experimental nature of R&D activities with contemporaneous documentation.

Consider how you will identify when R&D is completed during a production trial or site-based testing.

If your R&D is directly or indirectly related to the production of goods or services, consider how this may impact on the eligibility of activities. You may need to consider the impacts of the 'dominant purpose' test in these circumstances and potential feedstock adjustments.

The world’s energy transition is heavily reliant on Australia’s resources and critical minerals sector. Essential for clean energy technologies such as solar panels, wind turbines, batteries and energy storage, the industry is growing in both public and private sector investment in R&D.

By example, R&D tax claims made in this sector may include new extraction techniques and methods; efficiency gains in production processes; and strategies to minimise the environmental impact of mining and extraction activities.

In addition to the R&D Tax Incentive, the Federal Government has proposed two new Production Tax Incentives for renewable hydrogen and critical minerals. If passed, the incentives will apply from 1 July 2027.

A lean company structure and rapid prototyping means you might not be focused on preparing contemporaneous documentation or recording changes to your hypothesis or experimental outcomes. Consider how you and your team can use existing tools to document your R&D activities to ensure you claim every eligible dollar you can.

As you move through Seed, Series A and Series B growth stages, investors will want confidence that you have a robust R&D Tax Incentive structure and claim process in place. Consider whether your record keeping practices meet the requirements and whether you and your team are up to date on the latest guidance. Do you need help with understanding the details of the program and are you confident your team understand the R&D criteria and level of documentation expected?

We can also assist you with understanding how and when investor tax incentives might help you raise more capital faster.

Consider the distinction between the different aspects of the project (new development vs customisation vs configuration) and how different types of activities undertaken as part of your project are assessed against the R&D eligibility requirements.

Consider how you can use existing development tools to better identify and document your R&D activities. Agile development and record keeping practices are great at reducing administrative overheads, but mean companies tend to keep less project documentation.

Consider the internal business administration rule, specific to software and IT claims, which prevents companies from claiming the R&D Tax Incentive on activities that fall within this exclusion.