An illustrated guide to slashing your business bills with R&D

Key points at a glance:

  • Conducting R&D is difficult and expensive, requiring considerable up-front investment.
  • Using the R&D Tax Incentive, many of the associated R&D overheads can be offset, including utilities, new equipment, and salaries.
  • Use Nifty to get started on your R&D Tax Incentive claim - check your eligibility online for free.

No matter how you slice it, researching new innovations is hard and expensive. Serious research and development requires just as many resources as those that go into the business’s main money-spinner. Probably more.

Fortunately, many of the costs behind R&D can be claimed back using the R&D Tax Incentive. Some of these might even be unnecessarily contributing to the business’s biggest expenses.

Eligible R&D expenses

By divvying up the R&D-specific costs and offsetting them, the cost of doing R&D can be separated from the cost of doing business.

What sort of expenses could be eligible? Listed below are five overheads you might be able to claim using the R&D Tax Incentive, illustrated with famous artworks. (Because, tax can be dry and who can't appreciate art?)

1. Utilities

(Image source: Met Museum)

Whether it’s electricity, internet data or water, if your R&D activities require a lot of resources, you might be able to claim for these under the R&D Tax Incentive. Just be sure to claim for the R&D-specific portion of the utilities bill.

2. Travel

(Image source: WikiCommons)

For businesses that must travel significant distances – such as to remote test sites or other research locations – some of these costs could be recovered under the R&D Tax Incentive.

3. Salaries

(Image source: Wikipedia)

For staff undertaking or supporting R&D activities, their wages might be able to be claimed under the R&D Tax Incentive. This can also apply to contractors, and staff who only spent some of the working week supporting R&D activities, such as administrative staff (just be sure to apportion them accurately).

4. Equipment

(Image source: Wikipedia)

R&D often comes with a considerable shopping list, requiring cutting-edge new machines, raw materials, computer stacks, or laboratory equipment. Fortunately, however, a portion of these costs can be claimed under the R&D Tax Incentive.

5. Equipment depreciation

(Image source: Wikipedia)

New equipment can’t stay new forever. As tools and machinery begin their inevitable wear-and-tear, their depreciation might be eligible to be claimed under the R&D Tax Incentive – just don’t set things on fire.

Here be R&D Dragons

While it’s possible to claim for a range of expenses, these must be proven by documentation. Expenses must also be directly linked to specific R&D activities, and need to be separated from other general business activities.
If in doubt, get touch with one of our Nifty claims specialists – they’re experts in helping businesses lodge accurate and worthwhile R&D claims.

To get started on your R&D claim journey, visit the Nifty Forms.

David Lam

David is a Grant and Incentive Specialist with PwC's Nifty Forms. He's passionate about startups - you'll often find him at startup ecosystems events.