Tax concession for hydraulics R&D

A government concession has helped Parkes Hydraulics Services to grow from two to 10 staff members and contribute to its local economy.

The R&D Tax Concession is designed to fuel local research and development and is available to all sectors of industry. Best of all, each company controls the direction of their R&D.

This means Australian companies are able to deduct up to 125% of eligible expenditure that is incurred on R&D activities from assessable income when lodging their tax returns.

The Concession is administered through AusIndustry on behalf of the Industry Research and Development Board (IR&D) and the Australian Taxation Office.

Managing director at Parkes Hydraulics Services, Ian Allen credits the concession for giving the company a boost when it needed it the most by providing a stable outlook. This enabled him to create more jobs, knowing that the company would be able to sustain the growth.

"Basically, we made work out of it - we could take on more challenges and invest in more new projects," he said. "It encouraged us to put just that bit more energy into what we were doing."

The company has been making use of the grant since 2000 and has a stable of successful products to show for its research and development. One of its most successful developments is a purpose-built cable reeler for installing and reclaiming large electrical cable used in mining operations.

"In the past, the difficulty of retrieving cables meant mining operators often simply abandoned them once operation ceased, leaving literally kilometres of valuable copper cabling behind. The cable reeler allows this cable to be reclaimed and reused."

Other developments have included a portable fibre-optic cable reeling machine; a hydra fracture unit for breaking rock below surface level; and a 30 KW test facility for in-house hydraulic equipment testing and research.

To qualify for the R&D Tax Concession, a company's R&D activities must meet a range of criteria.

• Systematic, investigative and experimental activities which: involve innovation; involve high levels of technical risk; are carried on for the purpose of acquiring new knowledge; or creating new or improved materials, products, devices, processes or services.
• Other activities which are directly related to the undertaking of the above activities.
• The subject of an approved R&D plan.

Companies can claim the concession by completing the ATO R&D Tax Concession Schedule and the relevant labels in their tax return. But before claiming the concession, businesses must be registered by the IR&D Board for that year of income.

A company's annual expenditure on research and development must also be more than $20,000 to qualify - unless the work is contracted to a Registered Research Agency - and all R&D must be undertaken on a company's behalf.

Parkes Hydraulics Services intends to continue with its focus on research and development, specific to the industries it serves. Current projects include a purpose-built carry station of quick-hitch design for mining and a timber laminate hydraulically-powered table.

According to Allen, the company will continue to take advantage of the R&D Tax Concession. Future research will concentrate on designing and manufacturing purpose-built equipment as well as the manufacturing of testing facilities to further improve the company's repair services.

The AusIndustry website provides the information required to apply for the concession.