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Australian Government Grants for R&D & IP Protection

AusIndustry Grants

Commercialisation Australia 1,2  commenced on 4 January 2010 and is the primary source of Australian Government assistance for industrial commercialization. It broadly replaces the previous Commercial Ready Grants and the Commercialising Emerging Technologies (COMET) scheme. Commercialisation Australia structures support around the key development stages for the company in the commercialization process:

(a) Access of specialist advice and services, up to a value of $50k.

(b) Assistance in the recruitment of experienced CEOs and other executives up to a value of $200k over 2 years.

(c) Merit-based “Proof of Concept Grants” 3 of $50k – $250k over a 12 month period on a matching funding (50:50) basis, to test the commercial viability of the new product, process or service. Eligible expenditure components include labour, contract, plant, prototype and IP protection expenditures. However it should be noted that these grants are not intended for early stage research or conceptual development, or indeed the creation of the core IP. The core IP is required to exist already, however these grants will support the extension and broadening of the required IP protection

(d) Merit-based “Early Stage Commercialisation Repayable Grants” 4 of $250k – $2m over a 24 month period also on a matching funding (50:50) basis to undertake activities that enable a new product, process or service to be developed to the stage where it is market-ready. Again the eligible expenditure components include labour, contract, plant, prototype and IP protection expenditures.

For both the “Proof of Concept Grants” and the “Early Stage Commercialisation Repayable Grants” eligible IP protection expenditure includes fees to a patent office for the cost of filing a patent application, a patent search and examination fees, and annual maintenance fees, and also the legal expenses insurance as it relates to patents. Normally expenditure relating to trademarks and registered designs is not considered eligible expenditure, as is the legal cost of defending the IP rights. Eligible expenditure for IP protection is generally limited to the lesser of 10% of the total eligible expenditure or $200k.

AusIindustry provides numerous other grants for specific industries 5, and the eligibility, funding ratio, and definitions of eligible expenditure vary widely between these schemes.

Austrade Grants

The Export Market Development Grant (EMDG) scheme 6,7 is the key Australian Government assistance program for aspiring and current exporters of goods and services, including those granting IP rights overseas via licence agreements. Grants are in the form of up to a 50% reimbursement of eligible export promotional activities expenditure, above a $10k threshold.

Reimbursements are made, based on an EMDG submission, at the end of each financial year. Eligible promotional activities 8 include the costs of overseas representatives, marketing consultants, communications, free samples, trade fairs, seminars, promotional literature, advertising, bringing overseas buyers to Australia, and registration and insurance of eligible IP.

Eligible IP is the non-Australian IP of the applicant which can be shown to be a necessary ingredient of the relevant overseas marketing and commercialisation strategy for the goods and/or services. Payments made to patent & trademark attorneys and patent offices for the grant, registration, or extension of the period of registration of eligible IP are claimable. The cost of insurance premiums paid for protection against possible infringement of the relevant eligible IP is also claimable.

Tax Incentives for R&D

The Government has announced that it will replace the existing R&D Tax Concession with a new R&D Tax Credit. The R&D Tax Credit will come into effect from 1 July 2010. An exposure draft of the legislation and associated explanatory materials 9 for the new R&D tax incentive was released on 18 December 2009.  The two core components of the package will be:

(a) a 45% refundable tax credit (the equivalent to a 150% concession) for companies with a turnover of less than $20 million per annum.

(b) a 40% standard tax credit (the equivalent of a 133% deduction).

The new tax credit is decoupled from the corporate tax rate and thereby creates certainty in the level of assistance to be provided. Most importantly, it will provide a direct cash benefit to start-up phase companies conducting eligible R&D which, being often unprofitable, would previously have only been able to carry forward tax losses.

Footnotes

1. http://www.commercialisationaustralia.gov.au/Pages/Home.aspx

2.http://www.commercialisationaustralia.gov.au/Apply/Documents/Commercialisation%20Australia%20Customer%20Information%20Guide.pdf

3.http://www.commercialisationaustralia.gov.au/WhatWeOffer/ProofOfConcept/Pages/default.aspx

4.http://www.commercialisationaustralia.gov.au/WhatWeOffer/EarlyStageCommercialisation/Pages/default.aspx

5. http://www.ausindustry.gov.au/InnovationandRandD/Pages/home.aspx

6. http://www.austrade.gov.au/EMDG/default.aspx

7. http://www.austrade.gov.au/What-Is-EMDG/default.aspx

8. http://www.austrade.gov.au/What-can-you-claim/default.aspx

9. http://minister.innovation.gov.au/Carr/Pages/NEWRDTAXCREDITEXPOSUREDRAFTLEGISLATION.aspx