Australia vs the U.S: The R&D Tax Credit & Cost Saving Initiatives (Essay Sample)

COST SAVINGS AND FINANCIAL ADVANTAGES OF CONDUCTING PHASE 1 CLINICAL TRIALS IN AUSTRALIA VS. THE U.S. THROUGH THE R&D TAX CREDIT AND OTHER COST SAVING INITIATIVES.
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INTRODUCTION
According to US tax compliance and credit regulations, a R&D tax credit is a claim or a refund that is given to an entity that carries business in form of developing, designing, or improving. The main purpose of the introduction was to fuel innovations and technical creativity among citizens. Thus has been seen as a valuable source of finance for firms, and a way of reducing tax liability (Griffth et.al, 2001). Consequently, fueling innovations. The current analysis will be based on assessing advantages of R&D with application of success stories in different sectors.
BODY
Advantages of R&D tax credit
Research has shown that R&D credit has constantly remained a major source of financing for most businesses as it serves as a cost saving tool. The tax claimed is re-invested in the businesses. It remains to be a sustainable way of reducing tax liability. Consequently, fuelling innovations which have environmental and human related positive ripple effects (Laplante et.al, 2019). It has been shown that the tax saving has seen a lot of companies grow, expand and employ more employees, and diversify to other product lines. Therefore, R&D incentive has widely been seen as an advantage to a firm, which has seen a lot more firms in the recent past growing their innovations to leap its benefits.
Australian and U.S tax credit incentives
In Australia, It is registered under section 27 of 1986. Entities are required to perform a self-assessment under the act, and provide appropriate activities to the tax authorities. In US, it is described under section 26 U.S.C. § 41. It can be claimed by software developers, designers, developers, and business that work to improve or make innovations (Rao, 2016). The incentive has been on since 1981 to encourage business innovation. It is the most valuable incentive that has been considered so far for its calculation base as it is calculated on bases of employees performing the qualifying task.
Cost savings and financial advantages of conducting Phase 1 clinical trials in Australia vs. the U.S. through the R&D tax credit and other cost saving initiatives.
One of the major advantages lies in the manner it is calculated. This is because making use of employees’ wages results to a big tax liability being saved. This has seen a lot of companies expand operations and grow as they save on the overall cost of production.
The wide coverage of the tax credit has seen a lot of firms from diverse sectors benefit. Besides, since the credit can be claimed by business of all sizes, it makes it’s a valuable sources of finance (Rao, 2016).
From the trials, it is realized that the claim can be made each quarter making it a useful source of finance for a business. Besides, the credit can be claimed for current and prior years. Thus, exploring the options is valuable for businesses.
Another tax incentive like Protecting Americans from Tax Hikes (PATH) introduced in the US was meant to protect tax payers and made credit more inclusive to cover start-ups, small, medium, and big firms.
In Australia for example, the Radium capital being a specialist, it is able to assist firm’s access their refund even prior. This means that the R&D is a very useful incentive as it can be used to fuel a firm. It can form a great source of financing and income to the firm. Thus, it would be able to settle its obligations making its sustainable in the present and in the future.
For both countries, the firm should confirm that they qualify for the refund, and should be able to show the R&D operations they undertake. For both a tax agent should be able to clearly evaluate and indicate the activities falling under the refund. Thus, one major advantage that comes with this guidelines are to ensure only qualifying business benefit from the offset. Consequently, improving transparency, and credibility (Laplante et.al, 2019).
Like was the case with Linecrest, the tax credit has an advantage of sensitizing firms and making them go against the odds. The firm despite being at the brink of collapse, uses the incentive as a great source of funding. Linecrest was able to improve to high tech mining solutions after benefiting from the credit. Thus overly, we can say that the credit is a major source of financing for firms that need to take a turn and secure success. The firm did not borrow but used the income with the help of Radium. Thus, R&D investment, and the refunds has seen the firm regain its momentum, employ a lot of people, fuel environmental safety, and awake the dying mining sector. Through R&D, the firm is able to realize innovative ways of making waste economically viable. With a 100% investment into R&D after benefiting from Radium, and getting the tax incentives, the firm is able to comfortably transform as well being able to set its production operations. The firm saw R&D as a path through which they would scale up as well as get faster results. Thus, proving that prior phase 1 trials as a great source of cost saving. This is because one will get to multi production confidently, will be fast and more econom