Comment by Innercode | Hacker News Reader

Comment by Innercode | Hacker News Reader

Parent Full thread

I'm a consultant in the R&D Tax space. The press release relates to an advanced finding, which is an advanced approval of R&D activities. It does not however guarantee approval for the amount of expenditure they would be claiming. A tax refund of that size would naturally attract the attention of the Australian Tax Office(ATO). The press release is also dated before they could submit their tax return to obtain a 14/15 refund. A key problem with the press release is that there is now a $100million cap on how much expenditure they can claim in a financial year, so theoretically their maximum benefit would be $45million.

$120million in software R&D is a very large spend in Australia for one year, Google Australia for example claims about $40-$50million in R&D spend each year. Atlassian and some of the larger banks would claim a similar amount. I have not heard much about DeMorgan before, however if it all checks out they would be one of the most significant powers in the Australian tech space.

Fellow Australian here (albeit currently living in Tokyo).

The "We create tax refunds" part of your homepage says that a company can get a tax refund even if there is no sales.

Does this mean that if I establish a company tomorrow, invest $100k of capital, and spent $100k of capital on R&D, then the ATO will give my company $45k?

Yes, you have to spend the money though so youll still be down 55K, it doesnt count to things like capital purchases.

Depends who owns the company you spend the $100k with.

They'd need to pay 30% tax on their income, leaving a net outlay by the government of $15k (15%) overall.

Their income would be less than the $100k. They would have incurred expenses when they provided the services.

I paid $100k, the provider took the $100k and spent $60k. This means they declare $40k income.

The company pays $12k tax.

The Goverment gives $55k to my hypothetical company.

The R&D Tax Incentive was designed to give a cash benefit for startups who have little tax to pay. So your example is correct for a pre revenue entity, assuming no outstanding tax liabilities. Its an entitlement scheme, so as long as your doing R&D, have a company and spending your money through the company, you will get the benefit of the scheme.

It is one area that Australia has a significant advantage over the US for startups.

Andrew or David? We've done some work with you before (Vector 5).

Still working for Vector 5!

Cheers, Andrew

Reply on news.ycombinator.com