Tax concessions enable vegan biscuits

The R&D Tax Concession is designed to fuel local research and development and is available to the food processing industry. Best of all, each company controls the direction of its 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 (IR&D) Board and the Australian Taxation Office (ATO).

Roma Food Products began life as a small retail outlet in Melbourne, but since taking advantage of the concession, has expanded to become a manufacturer of health and dietetic foods that exports to more than 40 countries.

The company especially credits the AusIndustry R&D Tax Concession for the development of its vegan biscuit.

The program enabled Roma to pour $250,000 into the experimental activity and equipment needed to make its biscuit formula work. It was also important for the product to compete on taste with more common consumer products.

"These quality health foods are not ones you can just copy," director Frank Buontempo said. "There is a lot of development work to establish formulas suitable to achieve the desired product and also the suitability of the ingredients that will function in the cooking process and machinery."

Buontempo said the company had to re-engineer machinery with technical modifications to work specifically with its new product, as no existing automated baking equipment was set up suitably.

Even then, there were still set-backs to the development process. During its research, Roma experimented with cereal combinations for protein make-up similar to wheat, only to find the resulting biscuit formula so thick it would damage the mixing paddles.

The end result is a biscuit that is 98.7% fat free with no cane sugar or gluten-containing materials such as wheat, egg and artificial preservatives.

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.

In the meantime, Roma continues its research and has committed another $1.85 million to developing a single-stage continuous production process.

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