Why should US companies consider Australia for R&D? The unrivalled Australian and US economic relationship, underpinned by The Australia – United States Free Trade Agreement (AUSFTA) and strengthened by our common values and similar institutions, has led to great new innovations and collaborations between US and Australian companies, research institutions and governments.
Australia has been identified as a strong market opportunity for US companies embarking on their global expansion. “Australia is a land of trailblazers, with a rich culture of innovation and creativity. We’ve created centres of excellence in crucial disciplines, as the best minds meet to tackle the challenges that face Australia and the world.”
Australian science and research contribute significantly to global innovation. “The electronic pacemaker (1926), the ‘black box’ flight recorder (1958), ultrasound (1961), multi-channel cochlear implants (1970s), wi-fi (1990s), the polymer banknote (1988), Google Maps (2003) and a cervical cancer vaccine (2006) are all Australian innovations.”
Many US technology companies have caught on to Australia’s highly skilled, tech-savvy talent, with many Australians joining the ranks at companies like Dropbox, Survey Monkey, Datastax and more. What they may not know is that Australia is also a strong candidate for conducting R&D activity.
In many respects Australia has programs that are highly supportive of innovation undertaken in Australian borders. The Australian government encourages innovation with the Research & Development Tax Incentive, a program that has been around in many forms since the 1980’s.
Industry unspecific, the R&D Tax Incentive allows Australian companies to secure significant cash and non-cash benefits when undertaking eligible R&D activities in Australia.
At a high level – if research and development work is being undertaken with a view to generate new knowledge for which the outcome is unknown – then a company is generally seen to be engaging in eligible R&D.
The R&D Tax Incentive is a refundable tax offset program (for companies with associate turnover less than AUD$20m) – meaning that these additional tax losses can be ‘cashed out’. The program in its current format allows for a 43.5% refundable tax offset for eligible companies.
For example, if a US technology or medical device company sets up an Australian entity, spends $100,000 on eligible R&D activities and is pre-revenue, the Australian Taxation Office will give back a tax offset of approx. $43,500.
If you are a US company, don’t miss out on the talent or research and development opportunities Australia has to offer. Clearpoint Ventures are specialists in the R&D Tax Incentive program, and we work for both Australian and global companies. We are experts in identifying whether your company is eligible for the R&D Tax Incentive, and can help connect you with trusted networks and/or partners.