Grant Applications Are Now Open for 1.3bn Modern Manufacturing Initiative

In October 2020, the Australian Government assigned 1.3 billion dollars of funding to the Modern Manufacturing Initiative to help unlock private sector investment across three targeted streams. Below we outline a brief explanation of the MMI and its different streams, as well as exciting grant opportunities now available under the initiative. Interested in more information about this opportunity? Get in touch with the Noah Connect team, to discuss your business’s eligibility today.

What is the Modern Manufacturing Initiative (MMI)?

Briefly, the MMI aims to help Australian manufacturers create jobs, scale-up, compete internationally by providing co‑investment through three targeted streams:

Funding Streams
  • Manufacturing Collaboration Stream (provides funding for very large projects that support business-to-business and business-to-research collaboration, to build economies of scale)
  • Manufacturing Translation Stream (helps manufacturers translate good ideas into commercial outcomes)
  • Manufacturing Integration Stream (helps manufacturers integrate into local and international supply chains and markets)
National Manufacturing Priorities 

All of these streams are designed for manufacturing projects that have broad sectoral benefits across six National Manufacturing Priorities, these include:

  1. Space – Currently open for applications. Applications close 22 March 2021 5PM AEDT
  2. Medical Products – Currently open for applications. Applications close 29 March 2021 5PM AEDT
  3. Resources Technology and Critical Minerals Processing – Currently open for applications. Applications close 1 April 2021 5PM AEDT
  4. Food and Beverage – Applications will open for this sector in the coming weeks.
  5. Recycling and Clean Energy – Applications will open for this sector in the coming weeks.
  6. Defence – Applications will open for this sector in the coming weeks.

Grant Opportunities

As you can see, the first round of MMI is already open, with space and medical products the first national manufacturing priorities to receive funding. Commonwealth funding can provide up to 50% of eligible project costs across all funding streams, with a minimum grant amount of $1 million and a maximum grant amount of $20 million. It’s expected that the average grant size will be about $4 million.

For the MMI’s ‘Translation and Integration Stream’, an initial combined total of approximately $140 million is available from 2020-21 to 2023-24 across all the National Manufacturing Priorities. Specifically, for the 2020-21 financial year – $40 million is available to support grant opportunities across all the National Manufacturing Priorities. It’s also anticipated that there will be $40 million in 2021-22, $40 million in 2022-23 and $20 million in 2023-24 available.

Conclusion:

As you can see grant opportunities abound in the coming years for manufacturers within the R&D sector, and the opportunities are starting now! If you’d like more information on the process of R&D grant applications, please check out our blog ‘6 Musts For Grant Success In 2021‘. Alternatively, get in touch with our NOAH team of dedicated experts, we’re ready to help unleash your potential.

 

 

 

 

 

 

 

 

 

 

 

 

 

Case Study: Robotic Systems

“We work with companies to turn their practical real-world experiences into profitable new machines”

Adam Amos, Director, Robotic Systems. 

The Industry

The uptake of automation is set to deliver Australia $2.2 trillion over the next 15 year as more and more companies begin to understand and explore the potential of robotics and intelligent autonomous systems.  

The Company

Robotic Systems creates end-to-end solutions, which combine custom electronics, software and hardware to solve some of the most challenging problems in mining and agriculture. 

The Australian company’s collaborative approach and practical development pathway accelerates the journey from ideas to manufactured products through an advanced prototype development cycle.

robotics systems lab

Image courtesy of Robotic Systems

Robotic System’s clear value proposition and success in solving difficult problems is reflected in the company’s diverse and expanding client base, which includes start-ups to billion-dollar companies, as well as advanced research organisations as repeat customers.

Examples of successful projects include:

  • Weed geolocation and spraying systems for broadacre agriculture
  • Underground wireless monitoring systems for mining
  • Airborne methane analysis systems for the CSIRO

mining truck

Image courtesy of Robotic Systems

R&D Tax Support

The R&D Tax Incentive program has been a key support for Robotic Systems and its clients. Robotic Systems takes an active role in the identification of projects that might encompass some eligible R&D activities, and putting in place the right documentation to support claims.   This includes experiment design, setup and testing methodology, proposed or viable outcomes and actual results, as well related expenditure such as hours and prototype costs. 

For companies that access R&D services through a Registered Research Provider (RSP), it can be a great way to collaborate and gain access to expert R&D resources, without having to invest in specialist staff or infrastructure. And, you can claim an R&D tax offset for eligible expenditure on registered R&D activities even if your total claim is less than the usual expenditure threshold of $20,000 in an income year.

NOAH’s Involvement

NOAH has been working with Robotic Systems for several years now. The Robotic Systems team had made one R&D tax claim themselves, however, Adam Amos, Director of Robotic Systems, was less than convinced that the program was worth pursuing again, given the amount of time and effort it had taken the team for a relatively modest benefit.    

Fortunately, Adam decided to give it another shot, this time with NOAH Connect managing the process. NOAH came on board and refreshed the teams understanding about the scope of the eligibility criteria, took over the technical drafting and updated the cost methodology. Further, NOAH helped Robotic Systems navigate the increasingly complex compliance environment and ensure a sound R&D claims framework was established.  Most importantly, this allowed the team to focus on building and strengthening their core business.

NOAH is proud to be partnered with Robotic Systems and assist them with R&D Tax Incentive claims. To find out more about them, visit them at roboticsystems.com.au or check out their videos, ‘The Robotic Systems Experience’ and ‘How Does Robotic Systems Work?’.

Get in touch with Robotic Systems if you need a practical, affordable and creative solution to an automation problem.  

 

 

 

 

 

 

 

 

Meet Up: Noah Connect Attends Latest State Reference Group

On 12th March 2020, Noah attended a State Reference Group (SRG), an industry event co-chaired by AusIndustry and the ATO, for which Noah is a foundation member and regular participant. 

The SRG is a stakeholder forum where the tax advisors meet to discuss insights on operational issues surrounding the R&D Tax Incentive. The feedback from the SRG is then used to inform national-level, Roundtable discussions regarding program administration. For a complete list of meeting minutes visit, business.gov.au/program-news-and-updates.

Here follows some key points discussed at the most recent SRG

Integrity Framework User Journey

Much of the discussion focused on an updated ‘Integrity Framework User Journey’ guide: 

detailed user journey guide

Source: https://www.business.gov.au/-/media/Grants-and-programs/RDTI/RDTI-Integrity-Framework–Detailed-user-journey.pdf 

The current User Journey Guide helps you to navigate the steps along your journey and possible issues you may experience, including if you are selected for a review. 

detailed user journey guide

Source: https://www.business.gov.au/-/media/Grants-and-programs/RDTI/RDTI-Integrity-Framework–The-framework.pdf

The updated User Journey Guide will place focus on education and guidance for registrants, as requested by the Department of Industry, Innovation and Science (DIIS). Particular emphasis will be placed on increasing face-to-face engagement with companies and transparency throughout the eligibility exam, which is encouraging to see.  

As the program is based on self-assessment this update is great news – particularly for first time registrants who need assistance navigating the program and understanding its requirements.  

A New R&D Registration Portal

Also coming down the pipeline is a new R&D registration portal. The new R&D registration portal will be web-based and assessed online. It will feature more plain English language and a simplified question structure aimed to guide businesses to provide information required. 

A Refreshed ‘Guide To Interpretation’

The ‘Guide To Interpretation’ is a fulsome document that sets out how AusIndustry interprets key elements of the definition of ‘R&D Activities’. The current guide issued in 2016 can be found here

However, now in discussion is an updated ‘Guide To Interpretation’ that will help assist companies of all sizes, across all sectors to understand and assess whether their work is eligible for the R&D Tax Incentive. 

Industry Statistics Discussed

Below is a list of some interesting claim stats we came across:

Statistic Detail
SMEs make up the vast majority of companies registering for the R&D Tax Incentive, but large companies tend to spend more Approximately 80% of registrants of the total 14,231 registrants are SMEs, compared to the 20% of registrants that are large businesses. However, large businesses account for 52% of R&D expenditure under the program
SMEs make up the vast majority of companies registering for the R&D Tax Incentive, but large companies tend to spend more
  • Services, Manufacturing and Mining are the top three sectors registering for the R&D Tax Incentive
  • These sectors account for nearly 92% of registrations
The top three fields of research account for 91.0% of all R&D expenditure Engineering is the highest at $4.5bn, then Information, Computing and Communication Sciences at $4.0bn and Medical & Health Services at $1.2bn
Professional, Scientific and Technical Services accounts for 44.2% of registrations in the Services Sector
New South Wales, Victoria and Queensland account for the majority of registrations

 

Summary

Overall, it’s fantastic to note the R&D Tax Incentive Roundtable is taking on our continued feedback regarding the need for transparency, clarity and engagement with applicants. An incredibly valuable program that drives economic growth and productivity, successful applicants can claim up to 43.5% refund for undertaking ‘R&D Activities’. It’s therefore vital that businesses understand the program and believe they can successfully claim through a supportive process. 

If you’d like help registering for the R&D Tax Incentive for R&D Activities carried out last financial year (1 July 2018 to 30 June 2019) the 30th April registration deadline is now extended to 30 September 2020. For professional, competent assistance on the claims process, contact the Noah Connect team.  

Quarterly Payments Back on the Table

Cash flow. Cash flow, cash flow, cash flow. Two little words that can either make or break a business. Start-ups and SMEs will know that cash flow is the elixir of life, which is why the Labor government was applauded in 2011 when it announced its intention to pay entitlements to companies eligible to claim the R&D Tax Incentive cash rebate in quarterly installments. Our clients told us first hand that they viewed this act as progressive – a policy that seemed to show an understanding that cash flow and innovation are inextricably linked – and we wholeheartedly agreed.

Unfortunately, in December 2013 the new Coalition government announced that it would not be proceeding with the program of quarterly credits. Intensive planning and consultation with industry groups and huge support from all parties affected meant that the move came as a complete surprise. In fact, it was shown by a leading body in the biotech industry that the timing of the incentive payments was a significant factor in the value of the Incentive in encouraging additional R&D activities.

As a result, it comes as little surprise that the announcement by the Greens last week that it will ‘move amendments in the Senate to…put in place quarterly payments’ has been received with rapturous applause. The same amendment sees the Greens also aim to block the government’s plan to exclude companies with revenue over $20billion from claiming the Incentive.

With the aim of the Incentive to increase Australian levels of innovation and presence on the global stage, we were left scratching our heads as to why some of those companies at the forefront of innovative developments in this country would be denied such benefits.

Hopefully, we will see a positive result in the near future, with the government recognising the immense benefit quarterly payments can deliver in helping shape an economy of innovation.

Entrepreneurs’ Infrastructure Programme – Part 1 (R&D Tax)

The Entrepreneurs’ Infrastructure Programme was announced under the 2014-15 Commonwealth Budget, replacing previous programs such as Commercialisation Australia and the Innovation Investment Fund.

With $484.2 million over 4 years to be spent, the Government’s aim for the programme is to:

1.  provide strategic support to business

2. bring research and business together to develop and commercialise novel intellectual property; and

3. equip small and medium businesses with the management and business skills needed to lead change and expansion.

So what does that all mean? Well, it seems the government is taking on more of a guidance councillor approach. Whilst funding is still provided (on a co-contribution and competitive grant basis, as in past schemes), the money granted is to be spent on activities recommended by appointed ‘Advisors’ and ‘Facilitators’. There is a significant focus on internal business practices, improving business capabilities, business relationship management and access to the Government’s ‘network of advisors’.

The Programme consists of three elements

1. Business Management

2. Research Connections

3. Accelerating Commercialisation

1. Business Management (commenced 1 July 2014)

The services offered under the Business Management element of the Programme include:

  1. Business Evaluation – on-site analysis of all aspects of a business, carried out by independent, appointed Advisors. A Business Evaluation Report is prepared and presented, along with suggested improvements to the business.
  2. Supply Chain Facilitation – access to services that assist individual businesses to improve their interactions with suppliers and customers, to increase participation in new and existing markets. Improvements are suggested in a Supplier Improvement Plan.
  3. Business Growth Services – supports eligible businesses with ‘high growth potential’ for up to two years, so that they may develop and implement agreed business improvements to facilitate growth, as outlined in a Growth Services Plan. Businesses are assessed against specific merit criteria to determine the existence of sufficient growth potential, including financial capacity to fund growth.
  4. Business Growth Grant – reimbursement of up to half the cost (no more than $20,000) of appointing an external consultant to implement business improvements outlined in the above services. The total cost of engaging a consultant must be funded by the business before claiming the Grant.

To claim the grant, the business must provide two different consulting quotes and demonstrate:

i.) that the chosen consultant is providing new knowledge to the business

ii.) that the work involved in not simply a part of the normal business operations, and

iii) how the activities are undertaken will help to develop the capabilities previously identified as lacking.

Note: The business must have received advice offered under at least one of the areas outlined above in points 1-3 above, and be implementing the recommendations, to be eligible to claim the Grant.

Eligibility

To be eligible to access the services offered under the Business Management stream, businesses must:

–   Be a registered business/corporation

–   Be registered for GST

–   Not be tax-exempt

–   Have operated in Australia and filed business activity statements for at least 3 years

–   Be financially solvent

–   Have an annual turnover or operating expenditure thresholds between $1.5 million – $100 million

–   Be operating in the following industries: Advanced Manufacturing; Food and Agribusiness; Medical Technologies & Pharmaceuticals; Mining Equipment, Technology & Services; Oil, Gas & Energy Resources; or Enabling Technologies of these sectors, or demonstrate the business has the ability to operate in one of these industries in the future

Entrepreneurs’ Infrastructure Programme – Part 2 (R&D Tax)

Research Connections (commenced 1 September 2014)

The objective of Research Connections, the second element of the Entrepreneurs’ Infrastructure Programme, is to foster collaboration between businesses and the research sector for the purpose of commercial gain. The programme will provide eligible businesses with a ‘Facilitator’, tasked with identifying any ‘knowledge-related issues and/or opportunities’ within the business. In a nutshell, this element is looking to identify any business ideas with commercial potential that need research to develop them, to identify any knowledge gaps that are holding the growth of the business back and to facilitate businesses’ access to the research sector and other sources of relevant expertise.

The programme aims to achieve this through:

 1. A ‘Business Research Needs Assessment’, followed by

2. One-on-One access to a Facilitator who will:

o    Identify knowledge/related issues and/or opportunities

o    Identify critical research areas in need of improvement

o    Identify research opportunities into new or existing markets

o    Provide connection to relevant sources of expertise, knowledge and advice

o    Accommodate collaboration with the research sector

3. A ‘matched funding’ grant is also available for up to $50,000 over 12 months. This reimbursed funding must be applied for and only be used to:

–       Engage a ‘Publicly Funded Research Organisation’ to undertake research activities for the business

–       Engage a ‘Researcher’ to develop a new idea that holds commercial potential

–       Access research infrastructure

–       Access anything else that may be determined the ‘Business Research Needs Assessment’

Note:

i)     The total cost of the Research Connections project must be funded by the business before claiming the Grant.

ii)   The business must demonstrate that they were unable to access funding from other means i.e. state governments, other schemes

iii)  The project must be of ‘commercial relevance’ to the business and must be directly related to outcomes resulting from ‘Facilitator’ access

Eligibility

To be eligible to access the services offered under the Research Connections stream, businesses must:

–       Be a registered business/corporation

–       Be registered for GST

–       Not be tax-exempt

–       Have operated in Australia and filed business activity statements for at least 3 years

–       Be financially solvent

–       Have an annual turnover or operating expenditure thresholds between $1.5 million – $100 million

–  Be operating in the following industries: Advanced Manufacturing; Food and Agribusiness; Medical Technologies and Pharmaceuticals; Mining Equipment, Technology and Services; Oil, Gas and Energy Resources; or Enabling Technologies of these sectors, or demonstrate the business has the ability to operate in one of these industries in the future

What Does Australia’s Performance in Innovation Look Like?

The Australia Innovation System Report is compiled annually by the Office of the Chief Economist and explores quantitative and qualitative data gathered on innovators and their activities in Australia. Activities with direct relation to innovation are also examined, such as research and development, skills development and capital investment.

The Report provides some very interesting statistics on businesses that innovate, making it all the more important that businesses maximise their access to government innovation funding such as the R&D Tax Incentive.

According to the 2014 study, across all business sizes and sectors, innovative businesses are:

  • 31% more likely to increase income and 46% more likely to report increased profitability
  • Twice as likely to export and five times more likely to increase the number of export markets targeted
  • Twice as likely to report increased productivity, employment and training
  • 3 times more likely to increase investment in ICT
  • 3 times more likely to increase the range of goods and services offered

In terms of Australia’s performance in innovation, the 2014 Report gave us both good and bad news. The good news is that Australia’s SMEs perform extremely well in the innovation stakes by OECD standards. Furthermore, manufacturing, information services, media and telecommunications, wholesale trade and professional, scientific and technical services perform well above the national average.

It seems however that the good news stops there. Despite their good performance, the vast majority of SMEs do not undertake export activities. As a result, we see only domestic implications, with little impact on Australia’s presence on the global stage.

Those companies that do export, with larger roles globally, unfortunately did not fare as well as their small-medium counterparts. It seems that large Australian businesses are ‘not innovation leaders by international standards’. Furthermore, it seems that Australian businesses of all sizes have a lot of improving to do when it comes to introducing innovations that are ‘new to market’. Unfortunately, on a global scale, our performance is rather dismal, affecting the diversity of our export capabilities and general competitive potential. In fact, the report found that Australia has one of the least diverse export profiles amongst OECD countries.

In fact, the report indicated an overall decline in ‘new to market’ product innovation in Australia over the last decade, stating quite frankly that ‘Australia is primarily a nation of adopters and modifiers operating behind the innovation frontier’. With a positive association between business sales and ‘new to market’ innovation, as well as evidence that those successful in ‘new to market’ initiatives are up to eight times more likely to export than those that are unsuccessful, this news is of distinct concern.

Clearly, Australian industry needs to up its game in the innovation stakes. If finances are the issue, programs such as the aforementioned R&D Tax Incentive assist businesses in accessing cash rebates and tax offsets to fund innovative activities. However, the report points to a shortage of required skills and a deficiency of innovation and collaboration in management culture.

If Australia is to move away from a resource-based economy towards one that is increasingly knowledge-based, these issues need to be addressed swiftly and explicitly.

Budget 2015: Any Love For Innovation Funding? (R&D Tax)

The 2015 Budget sees no hugely significant changes to innovation funding. The flagship R&D Tax Incentive remained untouched, whilst funding for various research initiatives was either slightly cut or slightly bolstered. The government’s focus is largely on SMEs in the latest budget – a step in the right direction some say, as innovative start-ups are included in this category, however the measures fall short of directly addressing innovation growth as Australia’s economy transforms into one that is knowledge-based.

As outlined by the latest Australian Innovation Systems Report (produced by the Office of the Chief Economist), Australian innovation is being hampered by a shortage of required skills and a lack of collaboration and innovation in management culture. Unfortunately, it does not seem that the latest Budget addresses these issues directly.

Impact on the R&D Tax Incentive

Though the last two years has seen the R&D Tax Incentive (Incentive) poked and prodded by various sides of the political spectrum, no additional changes were announced in the 2015 Budget handed down last Tuesday night.

Since February 2013, two major iterations to the program have been proposed – a 1.5% cut to the offset rates offered under the Incentive and removing access to the program for companies with a turnover of more than $20 billion per annum.

The 1.5% reduction was formally rejected by the Senate earlier this year, an outcome welcomed across all industries.

The proposal to restrict companies with turnovers of more than $20 billion from claiming under the Incentive was instead replaced by a $100 million cap on eligible expenditure, thanks to a deal struck with the Palmer United Party. These changes will be applied retrospectively from 1 July, 2014.

Impact on Innovation growth

Though the Incentive remained untouched, there was some movement in other areas of government innovation funding.

There were also numerous measures introduced to encourage the growth of SMEs, with a particular focus on start-ups for, some may say, the first time in any budget. These measures include:

  • Encouragement of crowd-funding through proposed easing of capital raising laws
  • Scrapping of Capital Gains Tax payments when changing company structures (i.e. to Pty Ltd)
  • Ability to immediately deduct fees associated with initial company set-up
  • Instant asset write-off for purchases up to $20,000 (if turnover is <$2 million)
  • Whilst these are not explicit innovation funding measures, it is hoped they will assist in extending the runway for smaller companies and start-ups that are at the core of Australia’s innovation growth.

The Entrepreneurs’ Infrastructure Programme (EIP), introduced in last year’s budget in a bid by the Government to provide more ‘practical’ assistance to businesses, saw a $27 million cut as a result of a slow start to the initiative. Our own research has shown that those eligible to participate in the EIP either don’t fully understand the ultimate benefits of the program or view the process involved as too daunting, complex and/or time-consuming. Furthermore, Co-Operative Research Centres (CRC) – not-for-profit organisations supporting collaboration between researchers and industry – saw funding cut by $29.8 million.

Both the EIP and CRC cuts are an interesting move for a government that has seemingly been attempting to build a stronger bridge between innovation and commercialisation.

It’s not all slashing however – the National Collaborative Research Infrastructure Strategy (NCRIS) received an extra $150 million of funding for its researchers Australia-wide. Furthermore, the Australian Synchrotron – a world-class radiation research facility – was given an additional $13 million in funding.

The National Innovation and Science Agenda (R&D Spending)

The word innovation has most likely never been used so much in this country, in both political and general conversation, as it has in the last month. It’s safe to say that’s it the darling new buzzword. Finally.

And the cause of this shift? The National Innovation and Science Agenda (NISA). A $1.1. billion package, delivered through 24 new policies across 11 government portfolios.

As expected, responses have been mixed. Those focussed on numbers have commented that the $1.1 billion proposed is insufficient when considering that the government spends around $10 billion a year on research funding already.

Numbers aside however, the obvious attempt to change cultural perceptions of innovation and ‘reduce the stigma associated with business failure’ is to be commended.

Unlike previous proposals from the government the ‘Innovation Statement’ does present as a well-thought-out and considered proposition, in contrast to the more haphazard approaches we’ve previously seen.

Here is what is proposed:

START-UPS AND EARLY STAGE VENTURES

It seems as though the government may finally address the deeply entrenched negative attitude towards failure in Australia.

20% non-refundable tax offsets will become available to early-stage, angel investors. VCs and other investors that have invested in a start-up for more than 3 years will be exempt from capital gains tax for 10 years. VC investments aimed at expanding existing start-ups will be eligible for a 10% tax rebate.

Furthermore, in an attempt to ‘reduce the stigma associated with business failure’, changes to bankruptcy laws will see investors in a failed venture waiting only one year, as opposed to three, before being able to create a new start-up again.

SCIENCE AND RESEARCH

Addressing Australia’s deficiency in commercializing public research, a $200 million CSIRO innovation fund and BioMedical Translation Fund will support co-investments in new companies and start-ups developed by CSIRO itself or publicly-funded research agencies/universities.

Further working to encourage collaboration between industry and research, again with the aim of increasing commercialization, $127 million over 4 years is being allocated to block grant funding. The difference here is that now income from industry and ‘non-academic impact’ will hold as much weight as merit from research excellence.

$1.5 billion over 10 years will go to the National Collaborative Research Infrastructure Scheme, which explores projects such as ocean monitoring, medical research, and advanced manufacturing.
$800 million over 10 years will also be allocated to two major scientific projects – the Australian Synchrotron and the Square Kilometre Array.

EDUCATION

Over $100 million will go towards not only encouraging students to study more STEM subjects but also towards helping them ‘embrace the digital age and better prepare for the jobs of the future’.

Included in this is also an initiative to encourage more women to enroll in STEM subjects, with the ultimate aim of increasing female involvement in both startups and tech industries.

INTERNATIONAL TALENT AND VISION

Changes will be made to the 457 visas (Temporary Work – Skilled) system to attract more international talent to Australia and encourage international students to remain after graduating. STEM or ICT students will be fast-tracked for permanent residency.

$18 million will assist the international expansion of Australian start-ups, with global ‘launching pads’ to be established in Silicon Valley, Tel Aviv, and three other locations, to facilitate easier travel globally.

WHAT ELSE?

In a move requiring little to no funding, the government’s huge reserves of public data will be made increasing and more easily available. It is also proposed that the huge reserves will be made more ‘machine-readable’. Good news for big data-based businesses.

A link to the full National Innovation and Science Agenda can be found here.