Key points at a glance:
- Cash flow is a major concern for many small businesses
- Many small businesses also miss out government grant and incentive programs they're entitled to access
- One example is the generous and non-competitive program - R&D Tax Incentive
- Determining your eligibility and claiming such programs can be made easier with Xero and Nifty Grants
The small business concern
With cash flow a major concern for many small businesses, and the latest figures from Xero Small Business Insights showing that 44% of businesses were cash flow negative in December, bookkeepers and accountants are constantly looking at ways to free up working capital for their clients.
Research suggests a vast majority of Australian small businesses don’t apply for the grants or incentives they’re entitled to. Advisors and small businesses are faced with the challenge of time that it takes to complete the eligibility assessment and application process.
Technology is working to smooth that process
Government grant and incentive claim platform Nifty Grants, by PwC, has integrated with Xero so that advisors can easily import their client’s financial statements directly into the platform. The integration aims to make it seamless for advisors to gather information in support of a claim, reducing the imposition of time and the potential for inaccurate data entry.
The Research and Development Tax Incentive
As one example, research from PwC suggests that as little as one in three of the small- to medium-sized businesses eligible to receive the R&D Tax Incentive submit a claim.
The incentive program – which is jointly administered by AusIndustry and the Australian Tax Office – enables eligible companies conducting legitimate innovation, research and development to receive up to 43.5%* of their costs associated with R&D as a cash refund or tax offset. To qualify, the business must be operating as a company, have spent a minimum of $20,000 on eligible R&D activities and be creating new knowledge for their industry.
More than 45,000 Australian companies may be entitled to the incentive, and the number of applicants is not limited. The maximum a business can claim is $100m, so a small business can expect to claim all their eligible R&D expenditure in any financial year. Applications are accepted for a window of only 10 months following the client’s financial year end. For companies with a 30 June year-end, the deadline to submit an application is 30 April 2018.
The R&D Tax Incentive in action
Qwilr is an Australian startup who have used Nifty who have used Nifty Grants to claim the R&D Tax Incentive twice to continue to innovate and differentiate their web platform.
"Nifty Grants offered a straightforward interface that allowed us to get our R&D claim submitted in a fraction of the time we'd spent on a previous claim.” - Mark Tanner, Co-founder of Qwilr.
Explore your grant and incentive options
The online platform also helps facilitate other government grant and incentive applications, such as the Export Market Development Grant. If you’re in small business and think you may qualify for this or the R&D Tax Incentive, see how Xero and Nifty Grants can make the process simple or go ahead and confirm your eligibility to claim using this free eligibility checker.
*43.5% is the refundable tax offset rate correct at time of publishing, March 2018.
This article was first published on Xero's blog.