Grants can be a good boost to your company’s bottom line via rebates. However, it is best to remember that governments set up grants as a sum of money to help its funding body deliver programs on the ground.
This includes a whole suite of economic benefits to help grow jobs, research and development for new products and services as well as branching out into overseas markets.
Eligibility and merit-based are two categories for grants:
- With an eligibility grant, it is a done deal as long as you met the set criteria.
- In contrast, a merit-based grant is competitive as all the applicants are competing for the same pool of money. So, basically you need to be better than the other applicants to receive this type of grant.
This article focuses on eligibility grants that are available through the federal and state governments. The federal government distributes the Research and Development Tax Incentive and the Export Market Development Grant while the NSW government has the Payroll Tax Rebate and Small Business Grant.
The most common grants are the federal ones. Both of these programs have been around for decades in various forms; they have survived multiple changes and governments.
About 17,000 businesses a year take part in the R&D tax incentive. It is intended to assist businesses that are going through a process to discover or develop new knowledge or product. Even businesses that spend money on a new process or making new knowledge with no idea of the end result can be eligible for the grant.
This program covers a broad range of industries from boutique businesses through to heavy engineering and manufacturing and every sector in between.
It refunds your R&D spends to offset any tax liabilities. Until April 30 2017, the offset was 45%; the new rate is 43.5%. If you are in loss, you receive a cash refund.
To be eligible for this incentive, your business must:
- Be an Australian tax paying company.
- Have spent more than $20,000 on R&D in a financial year.
The incentive can be claimed every financial year. For large companies with a $20+ million turnover, the offset is a lesser rate and is non-refundable.
Last financial year, more that $131.45million was distributed to 3,059 exporters through the Export Market Development Grant. The average grant was $42,607.
With this program, the business needs to spend the money first to receive the benefit of 50% cash refund.There are eight categories that can be claimed:
- Marketing to target overseas markets
- Marketing consultancy to target overseas markets
- Expos and trade shows
- Overseas representatives
- Free samples to overseas markets
- Brochure and advertising material
- Intellectual property protection
To be eligible, the business must have spent more than $15,000 on targeting the overseas market, two years together can be claimed on the first application and the grant can be applied for seven times.
There are two NSW government programs:
- Payroll Tax Rebate
- Small Business Grant
The payroll rebate is part of the NSW Jobs Action Plan and provides eligible NSW payroll taxpaying businesses with a rebate when new workers are employed in new eligible employment.
The rebate is $6,000 over two years with $2000 on the employee’s first anniversary then $4,000 on the second anniversary. This is for every new employee engaged up to a threshold of 50.
The rebate applies to new positions filled on or after 1 July 2015 and continues until 30 June 2019.
To be eligible, the business must have:
- An active ABN.
- No more than 50 employees and the positions must be wholly in NSW, though they can be full-time equivalent, part time or casual.
- The business must also register for the rebate within 90 days of the employees start date.
For smaller businesses that do not pay payroll tax, there is the small business grant. It delivers a one-off payment of up to $2,000 for each new employee. It is payable after the new employee’s first anniversary.
Eligibility for the grant is the same criteria as the payroll tax rebate, except the business must not be paying payroll tax.
Feel like discussing grants further without having to navigate government departments? Talk to Grant, our free online eligibility checking tool. Grant asks you a series of questions which helps you quickly find out if you can get an R&D or EMDG grant. If you want to discuss any other grants you may be eligible for, including the NSW Payroll and Small Business Grants, get in touch.
This article originally appeared on the Hunter Headline website on the 13th July - http://www.hunterheadline.com.au/hh/expert-article/give-grant-go/