Research Income

Research income, Definition of Research and Classification as Research

Information necessary to determine what can and cannot be counted as Research Income
(From HERDC Specifications for Collection of 2007 data. Ref 7.1 - 7.8 - Nov 2007)

7.1. General requirements

All research income must:

• be received by a HEP and its subsidiaries for the 2007 calendar year
• be classified into categories (see section 7.4 of part A,) according to the organisation providing the funds
• comply with the definition of research (see section 1.3.9)
• be consistent with the HEP’s financial statements unless exempt as income received from a CRC or joint venture income reported using a notional share of joint venture income.

Income sourced from category 4 (CRC income) should be reported for the 2006-2007 financial year.

Research income for 2006 or earlier years omitted from previous collections CANNOT be included.

7.2. Research income which can be included in the Research Income Return—Return 1

• income received in 2006 in respect of the year 2007
• stipends and scholarships for higher degree research students, unless explicitly excluded in section 7.3 of part A
• interest income on donations, bequests and foundations which have been provided specifically for research 
• travel grants where funds are provided specifically for the purpose of travel and used to enable access to a programme of research
• funds provided for the purpose of clinical trials provided the purpose of the trial meets the definition of research (see section 1.3.9)
• research infrastructure grants unless explicitly excluded in section 7.3
• income from overseas HEPs provided specifically for research purposes
• income received through a joint venture (subject to the definitions at sections 1.3.5, 1.3.6 and 1.3.7 and the operation of joint ventures at section 7.5 of part A)
• income used to manage staff directly engaged in research or providing professional, technical or clerical support or assistance to those staff
• income received in support of:
  • professional, technical, administrative or clerical support staff directly engaged in research
  • the activities of students undertaking postgraduate research courses
  • the development of postgraduate research courses
  • the supervision of students undertaking postgraduate research courses.
  • research and experimental development into applications software, new programming languages and new operating systems (such R&D would normally meet the definition of research).

A HEP must reduce the research income reported for a particular category where research income received in 2006 or an earlier year has been refunded in 2007.

7.3. Research income which cannot be included in the Research Income Return—Return 1

• income received in 2007 in respect of the year 2008
• any research income received by the HEP from its subsidiaries
• any research income received by the HEP from any other Australian HEP or its subsidiaries (including organisations owned, controlled or funded by a HEP or HEPs) except in respect of joint ventures (section 7.5), shared grants (section 7.6) or transfers (section 7.7)
• in-kind contributions
• capital grants
• National Collaborative Research Infrastructure Strategy (NCRIS), ARC LIEF grants [(NCRIS is following the major programme of investments provided through the SII & MNRF programmes (grants under these programmes are also excluded under HERDC)]
• funds received through the ARC’s Research Networks scheme
• funds managed on behalf of third parties
• omissions from previous Research Income Returns-Return 1
• income provided for general or other purposes, even if that income is spent on research purposes
• funds provided specifically for the purpose of hosting, organising or attending a conference or workshop
• funds provided specifically for the purpose of producing research publications (that is, for publishing research rather than conducting it)
• consultancy fees for projects that do not meet the definition of research (as defined at section 1.3.9)
• funds provided specifically for travel to conferences/workshops and/or meetings
• interest income accruing to research grants and contract research grants
• research income received by independent operations which do not meet the definition of a subsidiary as defined at section 1.3.12
• income from the High Performance Computing and Communications Programme, to or through the Australian Partnership for Advanced Computing
• income provided for preparation for teaching
• funds used for
  • scientific and technical information services
  • general purpose or routine data collection
  • standardisation and routine testing
  • feasibility studies (except into research and experimental development projects)
  • specialised routine medical care
  • commercial, legal and administrative aspects of patenting, copyright or licensing activities
  • routine computer programming, systems work or software maintenance
• grants from the following DEEWR programmes:
  • Research Training Scheme (RTS)
  • Institutional Grants Scheme (IGS)
  • Research Infrastructure Block Grants (RIBG)
  • Australian Postgraduate Awards (APA)
  • Commercialisation Training Scheme (CTS)
  • Endeavour International Postgraduate Research Scheme Awards (IPRS)
  • Regional Protection Scheme (RPS).

7.4. Research Income Categories 

HEPs must enter all research income into Research Income Return—Return 1 according to the four categories of:

• Category 1: Australian Competitive Grants
• Category 2: Other Public Sector Research Income
• Category 3: Industry and Other Research Income
• Category 4: CRC Research Income

Specifications for Categories 1, 2 and 3 are set out in sections 7.4.1, 7.4.2 and 7.4.3 of part A.

Specifications for Category 4 are set out in Part B.

• any other research income received from the Australian Government that is not eligible for inclusion as Category 1 research income
• research income from Australian Government business enterprises
• research income (including contract research) from both state and local governments
• research income from state government business enterprises
• research income from partly government owned or funded bodies
• research income from Cooperative Research Centres (CRCs) in which the reporting HEP was not a core participant or participant (i.e. was not a signatory to the Commonwealth Agreement during the reporting period).

• Contracts
• Grants
• Donations, bequests and foundations

Australian:

• contract research income provided by industry or other non-government agencies
• grants for research other than government provided grants (which should be reported in either Category 1 or Category 2)
• donations and bequests for research from Australian business, Australian non-profit organisations and Australian individuals
• income received from syndicated research and development arrangements.

• contract research as research where the project was developed primarily by the funding agency, or jointly by the funding agency and the investigator(s)
• grants for research where the project was developed primarily by the investigator(s).

• Competitive grants, peer reviewed grants for research from non-Australian industry or non-Australian Government agencies including non-Australian industry collaborative research grants.
• In order to qualify for inclusion in this category the granting schemes must comply with the following criteria:

• contract research provided by non-Australian industry or non-Australian Government agencies including non-Australian industry collaborative research grants
• non-competitive grants for research from non-Australian industry or non-Australian Government agencies including non-Australian industry collaborative research grants
• donations and bequests for research from non-Australian business, non Australian non-profit organisations, and non-Australian individuals.

• Where all, or a proportion, of a donation or bequest is invested then only the income earned from that investment which is available for expenditure on research in the reference year should be included.
• Any portion of a donation or bequest that is not provided specifically for research purposes cannot be included.

7.5 Joint Ventures

In response to concerns from the sector about the inefficiency of previous arrangements, a new method of reporting joint venture income was introduced in 2006.
HEPs can either:

• report their research income against their cash receipts and record that income received in Research Income Return – Return 1, as for all other income or
• where cash receipts are not available or do not reflect the nature of joint venture, HEPs can use existing documentation relating to the operation of a joint venture (i.e. JVCAs) to report their involvement via Research Income Return – Return 1.

Where cash receipts are not available or do not reflect each HEP’s participation in the joint venture, HEPs can use existing documentation relating to the operation of a joint venture (i.e. JVCAs) to report their involvement in Research Income Returns-Return 1. A joint venture must have a Joint Venture Contractual Agreement (JVCA) (defined at section 1.3.6) if it is to be reported as joint venture income (defined at section 1.3.7) in the Research Income Return – Return 1.

The JVCA stipulates the notional distribution of joint venture income between the parties to the joint venture. For income to be included in the HERDC Research Income Return-Return 1 it does:

• not have to be physically distributed to HEPs in the joint venture; nor
• have to pass through each HEP’s audited Annual Financial Statements or Cash Receipts.

The share of research income received by HEPs should be determined according to their notional share stipulated in the JVCA and assigned to the category from which the joint venture income originated.

Example:

In a joint venture, three HEPs (X, Y and Z) are participating in research. The total amount of grants provided by an external source for the research is $100,000 and was received and retained by HEP X. All three HEPs have agreed on the ‘notional’ share of the joint venture income which is set out in the JVCA. HEP X is recognised as receiving 50% of the joint venture income as a ‘notional’ share for their involvement, HEPs Y and Z are each recognised as receiving 25% of the joint venture income as a ‘notional’ share for their involvement. This is recorded on each HEP’s JVCA, which is signed by an appropriate official of each HEP.

Each HEP’s HERDC Research Income Return should record their share of the joint venture income provided. That is, HEP X would report that it received $50,000 against the relevant category in the HERDC Research Income Return. HEPs Y and Z would record that they had each received $25,000 against the relevant category in the HERDC Research Income Return.

A HEP involved in a joint venture should retain a copy of the JVCA for verification purposes and to supply to the department if requested.

HEPs will risk having no income recorded against the relevant category in the HERDC Research Income Return – Return 1 if:

• a discrepancy exists between the reporting methods used by the HEPs involved in a joint venture; and/or
• a discrepancy exists between the shares reported by HEPs and the JVCAs.

7.6 Shared Grants

A shared grant is defined as one for which a component of the research income from an a gency for a particular programme, project or grant is passed from one HEP to one or more other HEPs and either:

• more than one HEP is, or the staff of more than one HEP are, named in the contract/agreement for the transfer of research income from the funding agency; or
• more than one HEP is, or the staff of more than one HEP are, named in the tender/application for funding.

Shared grants should be apportioned between recipient HEPs so that the nett amount retained by each HEP is reported. If, for example, HEP A receives a grant of $50,000 of which $20,000 is transferred to HEP B, HEP A should report $30,000 and HEP B $20,000. It should be possible for the nett amount retained by each HEP to be identified in its audited statement so that double counting does not occur.

Universities should claim a portion of a shared grant this way whether the other HEP involved in a shared grant is a HEP or is another type of research establishment.

The income should be assigned to the category from which the research income originated. (For example, if a state primary industries department passes $20,000 of a shared grant from the Rural Industries R&D Corporation to a HEP, the receiving HEP should count the $20,000 as income from the Rural Industries R & D Corporation in Australian Competitive Grants, rather than as Other Public Sector Research Income.)

7.7 Transfers

Where a HEP’s staff are in receipt of a grant transfer to another HEP and carry the grant with them, this must be reflected in adjustments to the HEP's income receipts.

7.8 GST

Where a HEP provides research services and charges GST, it should report only the research income it receives exclusive of GST.