Commercial Ready is closed: Now what?

For many companies that would have submitted an application for the now closed Commercial Ready program, the refundable R&D tax offset is worthy of consideration. This program uses the well-understood definition of R&D in the income tax legislation, and gives groups with less than $5m turnover and $1m in R&D investment the opportunity to receive a base rate of 37.5 cents in the dollar on an after-tax basis, and up to 52.5 cents on volume based increases over three years.

This actually compares favourably with the dollar for dollar taxable Commercial Ready grant when you look at them both on an after-tax basis.

Traps for new players

One of the misconceptions about the R&D tax offset (in contrast to the R&D tax concession) is that the $1m limit applies only to what you claim. The truth is that what matter is what you are eligible to claim. Watch out for this! You really do need access to high quality consultants as part of this process, as the consequences of poor tax returns are significant in both financial and reputation terms.

Nothing turns a potential investor off more than the possibilty of a dog fight with the ATO over a claim they haven't had the opportunity to assess.