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 2008 data (Ref Part A 7.1 to 7.7 - Jan 2009) (196kb)

7.1. General requirements

All research income must:

• be received by a HEP and its subsidiaries for the 2008 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 2007-2008 financial year.

Research income for 2007 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 2007 in respect of the year 2008
• 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 2007 or an earlier year has been refunded in 2008.

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

• income received in 2008 in respect of the year 2009
• 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 of Part A), shared grants (section 7.6 of Part A) or transfers (section 7.7 of Part A)
• in-kind contributions
• capital grants
• National Collaborative Research Infrastructure Strategy (NCRIS), ARC LIEF grants (NCRIS is following the major program of investments provided through the SII & MNRF programs: grants under these programs are also excluded under HERDC)
• grants from the Higher Education Endwoment Fund (HEEF) or the Education Investment Fund (EIF)
• 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 DIISR 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).

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.

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

• 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 Income Received Through Joint Ventures and Shared Grants

This section describes the circumstances under which income received through joint ventures and shared grants may be reported as research income.

Please note that there is not a separate category for income received through joint ventures or shared grants. This income should be assigned to the appropriate reporting category as listed in section 7.4 of Part A according to the original source of the income.

Example
A state primary industries department, with a joint venture contractual agreement with a HEP, passes $20,000 or a competitive grant from a Rural Industries R&D Corporation to the HEP. The receiving HEP should count the $20,000 as Australian Competitive Grant Income, rather than as Other Public Sector Research Income.

7.5.1 Joint Venture Income

Joint venture income (defined at section 1.3.7) may only be reported in the Research Income Return - Return 1 if a Joint Venture Contractual Agreement (JVCA) (defined at section 1.3.6) is in place. The JVCA must stipulate the notional distribution of joint venture income between the parties to the joint venture.

A HEP may report its notional share of joint venture income as stipulated in the JVCA as income in the HERDC Research Income Return-Return 1, even if it has not been physically distributed to the reporting HEP or passed through its audited annual financial statements or cash receipts.

Example
In a joint venture, three HEPs (X, Y and Z) are participating in research. They receive grants from an external source amounting to $100,000 which is 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, which should be supplied to DIISR on request to allow verification. If there is a discrepancy between the share reported by a HEP and their notional share as set out in the JVCA, the reported amount may be disqualified from inclusion in the HERDC.

7.5.2 Shared Grant Income

A grant is considered a shared grant if a component is passed from the primary recipient to another party, where that party is named in the contract/agreement for the grant or tender/application for funding. (A party may be a HEP, the staff of a HEP, or another research performing organisation).

If there is an agreement in place that describes a notional distribution of income between the parties (for example, a notional distribution is included in the contract/agreement or tender/application), grant income may be treated in the same way as joint venture income, as described above.

If such an agreement is not in place, a HEP should only report the portion of a shared grant that it retains. It should be possible for this amount to be identified in the HEPs audited statement so that double counting does not occur.

Example
HEP X receives a grant of $50,000 of which $20,000 is transferred to HEP Y. In the absence of an agreement that describes a notional distribution of income from the grant, HEP X should report $30,000 and HEP Y $20,000.

7.5.3 Demonstration of Benefit

Where a HEP reports income received through a joint venture or shared grant and the amount reported is not reflected in the annual financial statements or cash receipts, there is an expectation that the HEP be able to demonstrate that it has received benefits corresponding to the amount reported.

Example
HEPX is involved in a joint research project with HEP Y and a private research organisation PRO Z. HEP X receives a $100,000 grant for the project, which by agreement is to be shared 30/30/40 with HEP Y and PRO Z respectively. HEP X passes all the money to PRO Z and in return researchers from HEP X and HEP Y are allowed access to PRO Z facilities to conduct the research. HEP X and HEP Y each report income of $30,000. In this case the benefit corresponding to that amount is the fact that their researchers have access to the facilities at PRO Z to conduct the research.

7.6 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.

7.7 GST

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