6 Musts For Grant Success In 2020

Australian Federal and State Governments offer more than 1,000 grants and funding programs each year targeting different sectors and different types of activities from ‘cleaner tech’ to ‘accelerating commercialisation’.  

While grants can be a game changer for your business the application process is often difficult and time consuming (to say the least). In this blog, we’ll discuss some government grants that might be of interest to you and outline six essential tips to help you succeed with your application in 2020. 

Common Federal Grants 

Below are three popular federal grants available. However, to find the grant or support program right for your business, answer four simple questions at business.gov.au’s ‘Grants & Programs’ page.

Accelerating Commercialisation Grant (AC Grant) 

Who it’s for: Australian businesses with a turnover of less than 20 million per year who have a novel product, process or service they want to commercialise.

What you get: Up to $250,000 matched project funding for Commercialisation Offices and Eligible Partner Entities; or up to $1 million for other applicants.

Export Marketing Development Grant (EMDG)

Who it’s for: Aspiring and current exporter businesses of small to medium size.

What you get: Reimbursement of up to 50% of eligible export promotion expenses above $10,000 provided that the total expenses are at least $20,000. Eligible applicants may apply for up to eight grants.

Manufacturing Modernisation Fund (MMF)

Who it’s for: Small to medium manufacturing enterprises that are investing in new manufacturing technologies and processes. The program supports technology and efficiency improvements as well as investment in more transformative technologies.   

What you get: Co-funding grants of between $50,000 and $1 million.

Six Steps To Grant Funding

Congratulations, you’ve researched and narrowed down your selections. Now follow these six steps to maximise the success of your application.

1. Identify A Grant Program That Matches Your Objectives

Every grant program has objectives that are tailored to a desired policy outcome. Once you’ve determined that your company or project meets the basic eligibility criteria, the next step is to ensure your project aligns with the program’s objectives.

Examine closely:

  • The strategic objectives of the department offering the grant e.g. the MMF grant is sector-specific and falls under the Advanced Manufacturing Growth Centre (AMGC). The AMGC’s Sector Competitiveness Plan outlines the government’s strategic priorities for the sector – does your project align with these? 
  • Program statistics and previous grant recipients – research publicly available data on the number of grants awarded per round, average grant size, grants per sector and more. This will give you a practical guide to the types of projects the program intends to fund and its competitiveness.

This research will allow you to define the project in a way that is most sympathetic to the program’s objectives. Successful applicants in any program must demonstrate that they offer best value for money for the taxpayer’s dollar – push to show how your business will create jobs, improve Australia’s competitiveness or upskill workers. 

You can discover the projects successfully funded under the AC Grant here.

2. Map Out The Cut Off Dates

Grants often have strict deadlines and long assessment processes. There may also be multiple stages to the application process. 

Map out the cut-off dates as best as possible before starting the application process to understand a birds eye approach to the progression required. The timeframes must be carefully managed with your business needs, as in most cases, project costs incurred prior to the grant agreement or contract being signed will not be funded.

3. Get Financials & Records In Order

On a similar note, review the mandatory attachments to the application such as a business plan, detailed budget, financial statements and market research report. Feedback on applications will generally only be provided where the application is complete and all attachments are included, at least in draft form.

If you are successful, keep in mind you will also need to report on project progress against agreed milestones as per the funding agreement. 

4. Examine the merit criteria and understand the relative weighting/score

Using the AC grant as an example, businesses will need to demonstrate ‘need for funding’ before other criteria will be assessed. It’s a fine balancing act to demonstrate this need for funding and at the same time showcase that your business has funding planned from other sources to meet its contribution. 

5. Create A Comprehensive Business Plan

Expect to spend time meeting with program delegates and revising your application based on their feedback. Have in place good business governance processes such as a comprehensive business plan, strong financial reports and detailed budgets. This will give your case managers confidence in your business. Use your business plan to show how you will implement the grant successfully in the future of your business. 

6. Seek Professional Advice

Applying for a government grant is a complex, time consuming and highly competitive process. Seek out a professional advisor for help in assessing eligibility criteria and to ensure you put forward the strongest application possible.  

Excited to explore your future business goals? For professional assistance, contact the Noah Connect team. We’ll support you from the initial steps of grant selection all the way through to funding and beyond. Discover more about our services over at our ‘Grant & Funding Programs’ page.

Small Business & Family Enterprise Ombudsman’s Review of the R&D Tax Incentive

The much anticipated Review into the R&D Tax Incentive (R&DTI) conducted by the Small Business & Family Enterprise Ombudsman, Kate Carnell, has now dropped and it’s fair to say that Ms Carnell hasn’t pulled any punches.

In short, the review found that the complaints of those small and family business taxpayers whose historic R&DTI claims had been subjected to review were well and truly justified. It was critical of the inordinate amount of time that was allowed to elapse between the R&D and the implementation of the compliance activity. It found that in most cases that the compliance activity itself was not only “untimely’’ but also “inconsistent and in many cases targeted’’. Moreover, the review identified that there had indeed been “an overall shift in the way the R&DTI legislation has been interpreted over the last three to four years’’ with “a narrowing of focus leading to a rejection of claims” which previously might have been regarded as “low risk’’.

The Ombudsman concluded that such an approach “undermined the policy intent of the R&DTI legislation” and seemed to be more about “recouping Government expenditure on the R&DTI”. It had not only created uncertainty but “has had a devastating impact on the companies” to such an extent that some now “face financial ruin”. Much more could be said about how compliance activities generally were found to be “reactive”, to “assume guilt” and to “lack the commercial understanding of how small businesses operate”.

In this last respect, we note that one of the recommendations made by the Ombudsman was that “[s]ubstantiation and record keeping requirements should reflect commercial practicality with Regulator personnel fully equipped to understand and collaborate with small business”.

All in all, we think the Review is a pretty damning assessment of the way in which the R&DTI compliance regime is currently being administered.

In the interests of balanced reporting, we should note that the Ombudsman did also examine the role played by R&D consultants. We have to admit that our patch did not escape criticism with the Ombudsman finding that there was evidence of some “mischief” in the R&DTI consulting sector. To be fair, though, this was identified as being largely confined to those unscrupulous operators (including some larger firms) who were aggressively marketing promises of cash tax refunds to businesses. NOAH agrees that such behaviour needs to be stamped out in order to prevent longstanding and well-respected R&DTI consultants from being tarred with the same brush. This is why we wholeheartedly endorse another of the Ombudsman’s recommendations that something akin to Austrade’s “Quality Incentive Program Consultant Register” be implemented in the R&DTI space. This would provide a level of surety to business that a particular R&DTI consultant is indeed properly accredited and has the expertise to offer professional and reliable advice.

The Ombudsman’s other recommendations seem equally well intentioned and sensible, namely that clearer guidance be drafted that is more attuned to small business and assurances given that any audit/ review activity take place as close as possible to the taxpayer’s first year of claim.

We can only hope that the Regulators take these recommendations on board when and if they revise their approach to R&DTI compliance. Reading between the lines, the Ombudsman seems to be quite optimistic that a change for the better might well be on the horizon. Let’s hope that such optimism is not misplaced because what is not in dispute is that the R&DTI can help stimulate Business Expenditure on R&D (BERD) which, in turn, has been linked to productivity growth.

The Importance of Supporting Documentation (For R&D Tax Claims)

The first decision from the Administrative Appeals Tribunal (AAT) in relation to the R&D Tax Incentive was handed down last month (available here). The claim submitted by Docklands Science Park (DSP) for activities undertaken in their 2012-2013 income years was ultimately rejected after review, in main due to a lack of adequate documentation substantiating its R&D activities.

The emphasis on sufficient supporting documentation should come as no surprise – when introduced in 2011 the guidelines outlined for the Incentive heavily stressed the need for contemporaneous documentation detailing the creation of new knowledge, as well as the systematic progression of activities from hypothesis to experiment, observation, evaluation and conclusion. That is, clearly detailing the ‘scientific experimental method’.

The Docklands case is somewhat of an extreme example, in that, whilst not only failing to distinguish ‘core’ and ‘supporting’ activities, DSP also provided little evidence to suggest that the activities claimed had taken place at all. The AAT was eager to point out that simply registering activities as either core or supporting does not automatically make them so. Furthermore, DSP could not provide any evidence of a claimed $1.2million transaction, not an insignificant amount.

The R&D Tax Incentive is based on self-assessment. That is, it is the responsibility of the claimant (or a registered tax agent undertaking claim preparation on their behalf, such as NOAH) to determine the eligibility of the activities and associated costs to be claimed. To substantiate the claims, it is advised that supporting documentation be created concurrently whilst activities are undertaken i.e. not in retrospect – this a much more rigorous approach in capturing the correct data used when articulating the technical argument.

Documentation is Paramount for R&D Tax Incentive Claims

One of the most overlooked elements of companies seeking to apply for an R&D Tax Incentive, is appropriate technical and financial documentation.

When working with our clients, one of our priorities is always ensuring that measures are in place to ensure that sufficient documentation prior, during and after R&D activities have been undertaken. This discipline is important not only to comply with reporting requirements under the R&D Tax Incentive, but also improves the impact and effectiveness of R&D investments by providing data that facilitiates the analysis of R&D outcomes, and can highlights potential areas for future development.

Recent AAT decisions on R&D tax stress the importance of maintaining records to substantiate R&D activity. While these cases were related to claims made under the R&D Tax Concession, they do suggest that the government will adopt a more rigorous approach with regard to R&D record keeping.

This stance is reinforced by guidance material (including case studies) on the R&D Tax Incentive, stressing the importance of project governance and records that evidence experimental activity and the application of the scientific method. See cases HZXD v Innovation Australia [2010] AATA 879 and NaughtsnCrosses v Innovation Australia [2012] AATA 743

For further information or guidance on how to implement appropriate record keeping procedures for your company, please contact NOAH on (02) 9929 0100, or via our contact form.