Tax breaks for real-world research: the R&D tax incentive

What if, as active participants in the mining industry, we could be encouraged to spend money solving real-world problems and undertaking serious research into issues that impact us? The Research and development (R&D) tax incentive might be an effective pathway to recover or offset some costs of conducting tangible research and development activities.

This incentive offers different rates to companies of different aggregated turnover. For companies with turnover of more than $20 million, the R&D tax incentive gives an additional benefit of either 8.5% or 13.5% in addition to the normal tax deduction that would be applied. For smaller companies with a turnover of less than $20 million and in a tax loss position, the refundable offset is available and provides a cash refund of 43.5% of eligible R&D expenditure.

While not all parties or activities are eligible, key requirements for general eligibility are:

  • The company must be liable to pay income tax in Australia
  • The company must have conducted at least one activity that meets the legislated definition of a core R&D activity where:
    • at least one hypothesis-guided experiment is undertaken to generate new knowledge; and
    • other non-experiment supporting activities may also be eligible as supporting R&D activities.

MEC’s recent call for expressions of interest in our proprietary Post Doze method is a good example of a real-world site trial that is likely to be an eligible R&D activity, because:

  • the operation/s where it would be trialled would produce a hypothesis stating that the Post Doze operational method as per PCT/AU2017/050915 would result in a similar material movement, utilising less overall man hours and machine hours, when compared with a traditional truck and shovel method
  • the operation/s would then undertake comparative activities to measure the operational efficiencies of traditional waste movement by truck and shovel methods and that of the Post Doze method.

The Post Doze trial would:

  • be conducted in mining areas with similar material movement requirements to generate knowledge about the efficacy of the Post Doze method
  • involve undertaking supporting activities, such as specialised mine planning, financial modelling and reconciliation of operational impacts, which may also be eligible as non-experiment activities
  • incur costs, including licensing fees and operational support, that may be eligible as input costs.

In this way, a client could conduct an experiment to test a realistic hypothesis, reduce the direct cost of this by claiming the R&D tax incentive, and generate new knowledge to be distributed within the organisation or to the broader industry.

Contact us at MEC to discuss how we can help your operation get money back in your pocket by taking advantage of the R&D tax incentive.