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MedTech’s got talent

MPR Group

• Business accounting and advisory for innovators

– Accounting tax compliance– Director and board services– Capital raising– R&D and other grants– Start up services

• Will it employ staff?• Will it raise capital?• Will it list on the ASX?• Will you sell it and when?• How is the company owned?• Have you considered succession planning?

What does the future of your business look like?

Obligations of companies

• Company tax rate for entities with turnover under $10M is 28.5%

• Requirement to register and manage GST withholding and reporting to the ATO (if income will be over $75,000 per year). Small business can report on a cash basis.

• Completion and lodgment of annual company tax return.

• Appointment of a company director.

Employing staff

• Paying staff, payroll tax (if monthly salary of $47,916 or higher).

• Superannuation withholding obligations for staff.

• Opportunities to renumerate employees or investors with shares through ESOPs

• Fringe benefits tax on non cash benefits provided to staff

• Possible R&D tax incentive rebate on salaries

Seeking investors

• Business angels vs venture capital• Sophisticated investors – no prospectus required for

share issue• Follow on share issues need shareholder approval • Early stage innovation company – tax benefits for

investors• Putting investors on the board

• Level of commercial opportunities available

• Likelihood of litigation

• Effects on possible grants (R&D and EMDG)

• Trust structure to hold shares

Separate IP company considerations

Cash management

• Liquidity ratio – the assessment of the ability to pay debts as and when they become due

• current assets/current liabilities• A ratio of less than 1 would indicate that the

business is not in a position to pay its debts as and when they fall due and therefore technically insolvent

R&D tax incentive program

Notional R&D deduction(No tax deduction for R&D expenses)

Refundable tax offset @ 43.5%• Grouped annual turnover <$20m and

• Tax exempt entities own <50%

• If tax offset >Tax payable = cash

Non-Refundable tax offset @ 38.5%• Grouped annual turnover >$20m OR

• Tax exempt entities own >50%

• Tax offset reduces tax payable

• Unused tax offset carried forward

Eligible activities

Core Activities

• Experimental Activities

• Core Activities tests– Outcome can not be known in advance (knowledge gap)– Experimental activities must be carried out using the scientific basis and

method– Purpose of activity is to generate new knowledge (ie improved materials,

products, devices, processes or services)

• Example Core Activities– Software or prototype testing– Development of new algorithms

What is not a core activity?

• Activities are not core R&D activities if a competent professional in the field is able to deduce in advance how to achieve the outcome, on the basis of current knowledge, information or experience.

• Developing, modifying or customising computer software for the dominant purpose of use by any of the following entities for their internal administration (including the internal administration of their business functions):– the entity (the developer) for which the software is developed,

modified or customised;– an entity connected with the developer;– an affiliate of the developer, or an entity of which the developer is an

affiliate.

Expenditure related toeligible and registeredR&D activities• Salary and wages, contractors,

travel, overheads• Depreciation and balancing

adjustments• Other costs that have direct nexus

to R&D activities• Apportionment applied

Eligible expenditure

Eligible activities

Supporting Activities• Attending conferences for preliminary research

• Researching methods to conduct experiments

• Prior art searches

• Activities monitoring and feedback

• Project planning, management and administration

• Documentation

Application process

Tax year-end*

*Standard tax year end is 30th June.

Eligible R&Dexpenditureincurred

Export Market Development Grant

• Encourages small and medium sized Australian businesses to develop export markets

• Reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000

• Annual application process

Case Study

Level 19, HWT Tower40 City Road, Southbank, Australia, 3006

Simone Quin – Director

simoneq@mprgroup.com.au

www.mprgroup.com.au

03-9869-5936