This may seem cliché, but Australia is an amazing place to be an SME or start-up. The place is buzzing with innovation, ambition, hopes and dreams.

Now, I’ve given some enticing adjectives about our hometown’s bustling non-corporate scene, but let’s talk some nuts ‘n bolts.

Australia is home to some unbelievable financial incentives and government grants.

Poke your head out the window and you will find a company that could be eligible for government funding.

A fascinating paradox about government incentives is that, on the one side of the coin it is such an enticing source of funding, but on the other side most eligible companies either aren’t aware it exists or don’t know how to access it.

Ask yourself these 3 basic questions:

  1. Is your company doing something different to the competition (I sure hope so otherwise why are customers using you)?
  2. Is your company producing something (that differentiates you from the competition)?
  3. Are you selling to foreign markets (exporting)?

If you have answered yes to any of those, then someone should be poking their head into your window and telling you to investigate 2 main government incentives:

  • The R&D Tax Incentive
  • The Export Market Development Grant (EMDG)

The above 2 could offer a company up to 50% back on their eligible spend.

R&D Tax Incentive

Benefit: up to 43.5% cash back on eligible spend (in some instances the benefit is a tax saving)

There are 3 basic principles to the R&D Tax Incentive

  1. New Knowledge
  2. Experimentation
  3. Uncertainty

These three principles all flow into each other.

Here are some case studies to explain them:

  1. New knowledge begins by locating a gap in the market.

A software company (Airport Transport Pty Ltd) noticed that there wasn’t one web location to see all land travel options. They did an analysis of Webjet and saw that there wasn’t a similar land vehicle aggregation website. Further research into the market was and there seemed to be no one trying to roll out their idea in the manner they had in mind.

A gas heater manufacturer (Heat Us Pty Ltd) wanted to bring better performing gas heaters to the market. They wanted their heaters to emit lower gas emissions and to be more aesthetically pleasing. Further research into the market was and there seemed to be no one trying to roll out their idea in the manner they had in mind.

  1. Experimentation

Airport Transport Pty Ltd hired some contractor developers to prove the MVP or prototype. Many lessons were learned along the way. Once they felt they could make their product happen they started hiring internal developers.

Heat Us Pty Ltd started tinkering and developing. There were many iterations of the product and learnings along the way. The development process is an ongoing process.

  1. Uncertainty

Both Airport Transport Pty Ltd and Heat Us Pty Ltd weren’t certain at the onset that these new developments were going to succeed. They did, however, think that each would be a success, but the final products were arrived at through much experimentation.

Now we come full circle, the final products are what fill that initial gap in the market and could become commercial.


Export Market Development Grant

Benefit: up to 50% cash back on eligible expenditure

There are 3 basic principles to the EMDG

  • Australian product,
  • Revenue belongs to Australia
  • Marketing expenses must be recognised in Australia.
  1. Australian Product

What is being made by the company or the service being provided needs to be made or performed in Australia.

If some of the product is made abroad, e.g. clothing made in China, it could still be an Australian product if the main team are based in Australia.

  1. Revenue belongs to Australia

The revenue from items sold abroad need to flow back Australian entity. For the first 2 years of the grant no revenue is required at all.

  1. Marketing expenditure being recognised in Australia

The expenditure on marketing activities taken on abroad need to flow back to the Australian entity.

Some of these expenses could be: Google and Facebook ads, photo shoots, overseas sales people, Australian consultants targeting over seas sales, overseas marketing trips and flights, trade fairs and conferences and free samples.

Your business could be on the cusp of further growth and you just may be able to attain the cash to take off!


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