how to access r&d tax dollars
DESCRIPTION
How to Access R&D Tax Dollars. Jane Drummond – MJA Senior Manager Tony Partridge – MJA Associate. R&D Tax Program. Agenda A dministration and claim process The benefit What is R&D What $ can be claimed German Creek example. R&D Tax Program. Key gov’t support for industry R&D - PowerPoint PPT PresentationTRANSCRIPT
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How to Access R&D Tax Dollars
Jane Drummond – MJA Senior ManagerTony Partridge – MJA Associate
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R&D Tax Program
Agenda
1. Administration and claim process
2. The benefit
3. What is R&D
4. What $ can be claimed
5. German Creek example
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R&D Tax Program
Key gov’t support for industry R&D
Assists around 8,500 companies annually
$1.6 billion (tax revenue foregone)
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R&D Tax – Administration
AusIndustry/ATO joint administration
Innovation Industry
Science & Research
TreasuryInnovation Australia
(AusIndustry)
Technical Issues
ATO
Expenditure Issues
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R&D Tax - Claim Process
Self-assessment basis
Annual Registration of R&D – Lodge with AusIndustry within 10 mths
after FYE
Annual Company Tax Return Schedule– ATO
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R&D Tax – Program change
Effective 1 July 2011
R&D Tax Concession = 125% deduction – 7.5c/$ R&D (+175% premium)
R&D Tax Incentive =Tax Offset (40/45%)– 10c/$ R&D (companies >$20 mil turnover)– 15c/$ R&D (companies <$20 mil turnover)
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R&D Tax Incentive – The benefit
R&D spend $1 million $ benefit $ refund
Company T/O >$20 mil $100,000 -
Company T/O <$20 mil $150,000
$450,000
max refund dependant on tax lossR&D spend unlimited
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R&D is all about solving defined technical problems.
Where a company identifies a technical problem then essentially all work done to solve that problem is R&D
Innovation Australia Board
What is R&D?
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What is R&D – Legislation
R&D claimed on a project basis
R&D activities defined as•Core – must be experimental•Supporting – must be directly related
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What is R&D – Definition
Core (experimental) activity
(a)Whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:
– Is based on principles of established science;
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What is R&D – Definition cont
– Proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and . . .
(b)That are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
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What is R&D – Project examples
New/improved processes for higher efficiency, safety, productivity• New plant and/or process design
New/improved products• New market requirements
Not R&D• Supplier trials (on whose behalf?)
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What is R&D – Project work
.Conceptual/ hypothesis &investigative work
Production TrialsProduction Trials
Prototypes & Pilot PlantPrototypes
& Pilot Plant$
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What is R&D – Production trials
R&D can involve production activities (even when product is sold)
Claim restricted to portion of plant/ process that R&D relates
Trial period defined by minimum time
• technical improvements being sought and/or
• KPIs met
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What is R&D – Production trials
Evidence that supports the case of experimentation
Additional non- routine procedures eg heightened monitoring
Factors such as production disruption
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What $ can be claimed?
Salaries Contracts to RSPs eg Uni’s, CSIRO Other:
• Contractors• Hire of equipment • Travel• Overheads (direct/allocated)• Operation/production trial costs
Plant & pilot plant (tax deprec. only) Feedstock
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German Creek mine
Premium open-cut coking coal
operation
Opened in 1981
Raw coal stockpile and reclaim
Friable coal (HGI ~ 100)
Case Study:
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German Creek CHPP - Then!
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Key features . . .
• Rotary breaker to 50mm
• Screened at ~ 0.7mm (0.5mm
wedge wire)• 4 DMCs and two-stage Flotation (4
banks primary, 2 banks secondary)
• 900 tph nominal capacity
Original CHPP (1981-1983)
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ORIGINAL CIRCUIT
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Underground mine opened – increased production rates
Advance sales!
ROM stockpile + Rehandling >>> Feed size variation and plant imbalance
Inadequate surge capacity
Coal particle losses to flotation tailings.
Problems
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Spirals trialed IN-HOUSE to recover coal lost to flotation tailings
The required increase in product tonnage not achieved
Shell Coal Australia (major shareholders) offered services of their Senior Coal Prep Engineer as INTERNAL CONSULTANT
Flew from Melbourne for two-week visit (subsequently extended).
Initial trials
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Problem seen as the poor performance of DMCs and Flotation for particles of ~ 1mm
Planned additional DMCs and Flotation cells rejected due to time and cost constraints
Spirals known to work best (if not well!) on that size range
CONCEPT of spirals installation as a separate process stream first suggested
Circuit changes
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Paper Study by Capcoal / Shell team
HV Plant Visit to see and discuss recent spirals installation
Engineering Company (BMCH) included in preliminary design discussion
COMMITMENT!
Subsequent progress
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Decided to . . . Install spirals as intermediate feed
size process stream Size range of 0.4 x 1.4 mm chosen
on basis of feed size distribution 300 tph spirals capacity ( 1/3
increase in plant capacity ) Carry out or commission spirals
trials to determine / confirm operational details
Spirals CONCEPT
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REVISED CIRCUIT
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Pilot In-Plant Test Circuit
by Plant Personnel
Open circuit test rig using different aperture panels on small section of a deslime screen.
Underflow variable but 3mm aperture screen shown to give required 1.4mm cut.
200mm classifying cyclone and vibrating 0.8 mm sieve bend shown to give 0.4mm split.
Pilot Plant Testwork
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Test Circuit at Cyclone Sluicesby Capcoal personnel and Suppliers’ staff
Closed circuit test rig using -5mm +0.5mm slurry samples from wedgewire test panels in the plant.
Tests used to determine performance over different feed rates and feed solids
Results promising, so decided on more extensive steady-state testwork . . .
Pilot Plant Testwork
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Test Circuit at Mineral Depositsby Capcoal personnel and Suppliers’ staff
Similar test rig to previous tests but with improved sampling system.
Tests covered higher feed solids concentrations and higher feedrates
Determination of relationships between cut point, efficiency and feed conditions
Evaluation of minor spiral modifications
Pilot Plant Testwork
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Activities that are not core R&D activities include:Routine quality controlProspecting/exploring/drilling for minerals, oil
or gas Management studies or efficiency surveysCollection of information to comply with
statutory requirementsReverse engineering
Note: some of these activities may qualify, in a limited sense, as directly related activities.
Excluded ActivitiesTest Circuit at Mineral
Deposits
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Spirals would provide acceptable performance on the selected size range
Relationships between the process variables provided the basis for process optimisation
Middlings recycle and product desliming would be necessary to achieve the required yield and ash values
Conclusions
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FINAL SPIRALCIRCUIT
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50 x 1.4 mm to DMCs600tph
0.4 x 1.4 mm to two-stage SPIRALS
300tph
- 0.4mm to FLOTATION. . . Six banks single stage 300tph
Associated additional pumps, sumps, screens and classifying cyclones
Revised Plant
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Six weeks of in-plant trials by Plant Staff
To establish steady state operation To establish control strategy and
operating philosophy
Finally . . .
The installation of flowmeters and variable speed drives to enable optimum control
Plant Optimisation and Control
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Summary – R&D Project
Technical problem (defined )
• Fines problem due to high friability and lack of surge capacity
Technical objective (new knowledge)
• Investigation of the use of spirals as a separate parallel process
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Summary – R&D Claim
R&D activities (experimental )
Preliminary studies (spirals on tailings) $ salaries
Concept development (spirals as parallel process stream) $ salaries and consultant costs
Preliminary test-work on site (1 spiral)$ salaries, plant costs
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Summary – R&D activities cont.
Pilot scale test-work off site (2 trials at 2 locations) $ salaries, travel, contractor/lab costs
Design review (iterative feedback R&D) – 2 stage process requirement identified $ salaries
Full Scale Plant trial (6 weeks)$ salaries, Plant op costs (>$1 mil)
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Summary – R&D claim
Project cost approx $ 2 million
Claim value = $ 200,000
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Last word – Evidence
You need supporting documents eg:
- Records of technical issues- Approvals for process/product changes- Project plans/scope of works- Trial plans, sheets/logs, reports, photographs - Consultant/contractor reports- Additional testing/monitoring systems - Presentations and publications
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Thanks for your time - questions?