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.  

 

 

 

 

 

 

 

 

Budget Boost for R&D Tax Incentive from July 2021

Along with many other stakeholders in the Start-up and Innovation Funding sector, NOAH was delighted to see the Morrison Government enhance the value of the R&D Tax Incentive program by committing to additional investment in its 2020 Budget over the forward estimates period. That is to say, that the Refundable R&D Tax Offset rate has been significantly increased and the Non-Refundable R&D Tax Offset benefit has, at the very least, been maintained.

In so doing, the Government has abandoned its controversial plan to cut $1.8B from the program in an acknowledgment that business investment in research and development will be a critical element in the post-COVID economic recovery. Such a view is obviously shared by the major parties because the legislation enacting the R&D tax boost was swiftly passed by Parliament last Friday without amendment.

The changes will take effect from 1 July 2021 and are expected to support more than 11,400 businesses both large and small.

Small businesses

For small companies turning over less than $20 million, the Refundable R&D Tax Offset will be increased to 18.5% above the claimant’s corporate tax rate, and the $4 million cap on annual cash refunds will not proceed.

Large businesses

For larger claimants turning over more than $20 million, the much maligned and complex R&D intensity test for the Non-Refundable R&D Tax Offset has been simplified by being reduced from three to two tiers. Moreover, the rates for these two tiers have been increased with an R&D intensity of 0–2% under Tier 1, which is now attracting an additional tax offset of 8.5% (which is on a par with the current non-refundable value proposition). Those companies that commit a greater proportion of their business expenditure to R&D — i.e. those characterised by R&D intensities in excess of 2% — will be far better-off under the changes by being entitled to a 16.5% tax offset on the increment of R&D expenditure above the 2% threshold.

Offset rates in FY22

In essence, the new reforms will decouple the R&D Tax Offset rate from the company tax rates, fixing the Refundable R&D Tax Offset rate at 18.5%, and the Non-Refundable R&D Tax Offset rate at 8.5% or 16.5% over the prevailing corporate tax rate (depending upon the claimant’s R&D intensity level).

The effect of this decoupling is that R&D tax claimants will no longer see incremental increases in their net R&D benefit arising from the falling of corporate tax rates. For example, the maximum tax benefit under the Refundable R&D Tax Offset will remain at 43.5 cents in the R&D dollar in FY22 when these changes first take effect. This 43.5 cent benefit being made up of the 25% corporate tax rate that will be applicable to base rate entities in that year plus the additional 18.5% Refundable R&D Tax Offset. This is but a minor consideration in the scheme of things and a small price to pay for greater certainty of investment in and quantifiable benefit for business investment in research and development.

We’ll be exploring the import of all other key changes in our upcoming blog posts including the introduction of a uniform clawback rule, as well as the proposed improvements to the administration, integration and transparency of the program.

2020-budget-boost-for-R&D-tax-incentives

Source: https://budget.gov.au/2020-21/content/factsheets/download/tax_fact-sheet.pdf

Better Bottom Line at Tax Time?

With the financial year almost over and the budget offering incentives, many businesses will be talking to their accountants about all things tax-related.

Questions might include:
– ‘What purchases should I make?’
– ‘Should I pre-pay rent?’
– ‘Am I going to make a profit or a loss?’

The answer to this last question will obviously inform whether the taxman is owed money or whether a refund is in the offing.

How your taxable position can change things.

In addition to all these bread and butter issues, more savvy business owners and accountants might also discuss R&D tax offsets. There are generous refunds on offer under the Federal Government’s R&D Tax Incentive program – up to 45% of eligible expenditure – but the level of refund very much depends on a company’s end-of-financial year taxable position. Hence the need for R&D to be factored into whole-of-business discussions before closing P&Ls.

What to be cautious of…

It is important that those inexperienced in R&D tax proceed with caution. There has been something of an explosion in R&D advisers and online solutions seeming to offer a fast track to claims and benefits. While it is true that the R&D tax program is relatively broad-based and can be self-assessed, activities must still be benchmarked against a legislative definition. Justification for a claim must also be defined and registered with the government. Furthermore, it is not unusual for claims to be scrutinised by bureaucrats long after registration has been confirmed.

How to set your business up for sustainable R&D claims.

There is a lot to be said for spending a little more time upfront thinking about how best to characterise project activities and articulate the arguments justifying the “experimental” nature of what has been done. In other words, get the right advice, set your business up for sustainable claims going forward and don’t treat the whole exercise as easy money for little or no effort.

Things to consider when registering your R&D Tax Incentive claim:

• Don’t register broad-based, generic or umbrella projects – that’s a sure way to attract a review from AusIndustry
• Articulate your hypothesis with an “If …then…” statement
• Make it clear that your new knowledge was not a transparent extension of the prior art

Some examples of things to consider on the cost side of your R&D claim:

• Startups – consider whether you paid yourself or how much should you pay yourself – considering other tax and super implications
• Has your business incurred R&D expenditure to an associate? If so, the expenditure must be paid prior to the end of the financial year in order to claim as an R&D tax offset in that year.
• And many more……..

Call us for a chat about maximising your benefits at tax time.

How is the R&D Tax Incentive Measuring Up in 2014?

Today’s The Australian newspaper contains an interesting article penned by former Queensland Premier, Peter Beattie, questioning whether recent funding cuts to universities and research institutes is in the nation’s best interest.

A recent study has provided insight into how businesses view the R&D Tax Incentive, 2 years after its inception.

The Incentive offers an increased benefit to claimants compared to the previous scheme (the R&D Tax Concession).  Although the method of arriving at the Tax Incentive benefit is somewhat contorted when compared to the previous Tax Concession, the bottom line is that the benefit for companies with revenues of:

–       Under $20M & loss       = 45% cash rebate for every dollar spent on eligible R&D

–       Under $20M & profit     = 15% additional Net-Profit-After-Tax

–       More than $20M           = 10% additional Net-Profit-After-Tax (whether in profit/loss)

The study found that the biggest concerns held by companies in relation to claiming the Incentive centered around the new definitions of core/supporting activities and remaining within the parameters of required project definitions.

Interestingly, though unsurprisingly, almost half of those surveyed felt that, due to the ongoing iterations made to the legislation, the Tax Incentive was a benefit that could easily be scrapped. With innovative businesses uncertain by their very nature, it is disappointing that a scheme meant to bolster innovation may instead inhibit it, with 81% of companies concerned about lodging an application.

Encouragingly, over 70% of those surveyed engage a third party to complete their R&D Tax Incentive claim on their behalf. Although this indicates that indeed the Tax Incentive is more compliance-heavy than its Tax Concession predecessor, it also shows that businesses continue to recognise the solid benefits the scheme offers. Furthermore, this figure shows that claiming the Tax Incentive is not simply a financial exercise but requires technical insight and knowledge in how best to go about structuring and documenting a claim and the projects it encompasses.