Did you know a registered Research Service Provider (RSP) could conduct R&D activities for your business, so you don’t have to? Hundreds of businesses use RSPs to fast-track their innovation goals every year. Interest rate hikes, war in Europe and a pandemic that’s sticking around are causing more businesses to shunt their innovation plans to the top of their to-do lists. And that’s a smart move. Developing a brand new product or finessing an existing one through innovation could help your company combat the economic headwinds ahead.
But many businesses struggle to get R&D programs up and running. And that’s where RSPs come in. R&D is an RSP’s bread and butter. These organisations can help you fast-track your R&D plans and get your leading-edge ideas into the market faster. From what an RSP is and how it can help your business to tips on how to choose the right one, let’s take a look at all things RSP.*
What is a registered RSP?
Registered RSPs are specialist organisations. They are registered with the Department of Industry, Science, Energy and Resources to complete R&D either on behalf of or on a contract basis for other businesses. Specifically, these organisations are registered under the Industry Research and Development Act 1986. Their registration status means they have both the required scientific/technical expertise in specific fields of R&D and the resources to carry out research for other businesses.
You may hear the terms contract research organisation (CRO) and RSP used interchangeably. While a CRO for example, Southern Star Research, can be an RSP, it’s not a given. A CRO typically provides outsourced services to businesses in the biotech, pharmaceutical and medical device industries. Clinical trials are a great example of some of the services they provide. The main difference between a CRO and an RSP is that RSPs are registered as experts in their field with AusIndustry and this allows their clients additional access to the R&D Tax Incentive (R&DTI).
Additionally, while CROs are usually associated with biotech and pharmaceutical research, RSPs can supply R&D services to a host of other sectors depending on their areas of expertise. So if you’re considering engaging a CRO, but you’d still like the option of accessing the additional benefits RSPs can offer, then double-check the CRO is also a registered RSP. Visit the AusIndustry webpage for a full list of registered RSPs.
What services do RSPs offer?
RSPs give you fast and easy access to the specialist staff or infrastructure your R&D projects need. Your company essentially buys the RSP’s services. So your business avoids wearing the long-term costs and commitment that completing R&D in-house entails. It’s crucial to note, at this juncture, that RSPs come in all different shapes and sizes. Registered RSPs are only registered for the specific areas of research where they’ve shown themselves to be suitably proficient.
You can tell which areas an RSP specialises in by checking the Australian and New Zealand Standard Research Classification (ANZSRC) codes it has registered with AusIndustry. The ANZSRC codes are part of a classification system that supports the measurement and analysis of R&D statistics in Australia and New Zealand. It means R&D data between the two nations can be easily compared with R&D from the rest of the world.
By way of example, Queensland-based Behind The Meter Pty Ltd is an RSP and part of Zero Emissions Developments (ZED). It has developed ZED’s Behind The Meter® distributed energy solution for commercial, industrial and residential applications. And it also provides specialist contract research services in its RSP capacity to other businesses under six different ANZSRC codes relating to battery technology.
How do I work with an RSP?
1. Find an RSP
Working with an RSP is easier than you think. The first step is to identify RSPs that are suitable for your business and your R&D. And the best place to do that is by visiting AusIndustry.
2. What to look for in an RSP
Review the ANZSRC codes and zero in on the RSPs with expertise that suits your field or fields of research. It’s usually more convenient to work with a local RSP. But the COVID-19 pandemic has shown us that local and in-person is not always necessary or desirable. And if you can’t find a local provider that you’re happy with, consider casting the net wider by looking interstate. Finding the right RSP match for your business on R&D facilities, capability and capacity is the goal.
3. Get to work
It’s crucial to discuss and document your research plan and project scope with any RSP you’re considering. Your RSP should try to ensure the R&D you want them to conduct is eligible for the R&DTI. Once you have a contract in place with your RSP, it’s time to rock and roll with your research. Lock in regular catch-ups with your RSP to discuss your R&D and how it’s progressing. Ongoing engagement with your RSP is crucial to ensure your R&D plan stays up to date and relevant.
4. Register your research with AusIndustry
Apply to register for the R&DTI through the R&D Tax Incentive customer portal. Make sure you do this within 10 months of your company’s income year-end when you completed the R&D. Work closely with your RSP to keep your R&D records shipshape and that you’re tracking all your expenditure eligible for the R&DTI.
5. Lodge your tax return
When the financial year rolls around, gather your records and check the amount you can claim for R&D expenses. Then lodge your eligible expenses and total claim in your company’s tax return.
What are the benefits of working with an RSP?
Beyond easy access to expertise and resources for your R&D, there are additional plus points to using an RSP to perform R&D.
We all know that R&D, by nature, is risky. It’s chock-full of unknowns. But if you use an RSP, you can limit some of the risks. First and foremost, you can be assured of the quality of the expertise and resources your registered RSP will provide because they’ve received the AusIndustry stamp of approval. You’ll also have transparency around the pricing structure for the R&D work you commission with an RSP. Using an RSP’s services has flexibility baked in. And this makes testing and learning about an innovation less of a gamble than it might otherwise be. You can use an RSP for a short-term R&D need, as a cost-effective way to dip your toe in the water for new research on an existing product, or even for your first foray into R&D.
Ease of access to the R&DTI
Another stand-out reason for engaging an RSP is the positive impact it has on your ability to claim the R&DTI. Although your business is not directly conducting the R&D, you can still claim the R&DTI for your eligible expenditure on the R&D activities you’ve registered. And what’s more, if you use an RSP, you don’t have to meet the $20,000 annual R&D expenditure threshold. You can claim the R&DTI for any amount below $20,000 in your income year if you conduct your R&D through an RSP.
Fast-track your funding and your R&D
If you’re eligible to claim the R&DTI refund, you’re eligible to apply for a Radium Advance. And eligible R&D expenses below $20,000 with your RSP are no exception. At Radium Capital size doesn’t matter. There are no limits on the funding amounts for your R&D loans. We believe all businesses — big or small — deserve to have the capital they need when they need it.
So if you’re planning to turbocharge your R&D program with an RSP, why not give your R&D budget a capital injection with a Radium Advance? Radium Advances let you access your upcoming R&D tax refund early. Our seamless online platform means we can approve your finance quickly and have the money in your account a few days after you sign your loan documents. Interested? Talk to one of our R&D finance experts about applying today.
*Radium Capital is a specialist R&D financier. The information in this article is general and is for information purposes only. It does not amount to advice. Radium Capital recommends that any business engaging the services of a Research Service Provider (RSP), assessing its R&DTI eligibility and/or preparing its R&DTI claim should seek the advice of an R&D Tax Consultant.