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R&D TAX INCENTIVE CASH REFUNDS IN AUSTRALIA

Our national reach service helps innovative Australian companies access and
optimise available R&D Tax Incentive cash refunds or tax offsets.
Our national reach service helps innovative Australian companies access and optimise available R&D Tax Incentive cash refunds or tax offsets.

The R&D Tax Incentive is a business assistance program offered by the Australian
Government to encourage and support Australian companies to undertake R&D activities that they may not otherwise be willing to attempt without government cash assistance.

R&D activities are generally new, innovative activities (goods or services or information technology systems) with outcomes that a competent professional can’t know or determine in advance, based on current knowledge, information and experience.

Unfortunately many Australian companies undertake qualifying R&D activity and don’t realise they can claim cash refunds back from the ATO.

If your company has an annual turnover below $20 million and spends over $20,000 on eligible R&D activities then 43.5% of monies spent on eligible R&D expenditure is paid back to the company in cash by the ATO, less any other tax liability.

FREQUENTLY ASKED QUESTION

The Research and Development Tax Incentive is a program run by the federal government that offers a tax offset for engaging in eligible R&D activities. In place since 2011, the R&D tax incentive is designed to encourage businesses to invest in new techniques, products and technologies in their respective industries.
You’re able to claim back a refundable 43.5% of the costs used in your eligible R&D activities if your business had a turnover of less than $20 Million AUD. If you had an aggregate turnover over $20 million AUD, you can claim a nonrefundable 38.5%.

Yes. If you’ve spent at least $20,000 AUD on eligible R&D activities, you may qualify for the R&D tax incentive.

Your business needs to be:

  • Your business needs to be:
  • Incorporated under foreign law, but an Australian resident for income purposes or
  • Incorporated under foreign law and a resident of a country with which Australia has a double tax agreement
  • Be liable to pay income tax within Australia
  • Engaging in at least one core R&D activity

There are strict criteria your business needs to meet in order to qualify for the R&D Tax Incentive. Essentially, it’s about finding out new information. Your businesses research and development activities must be considered as either core or supporting activities.

 

The R&D Tax Incentive is administered by both the Australian Tax Office (ATO) and the Industry of Innovation and Science Australia (IISA).

  • Core activities are classed as experimental activities that are based on principles of established science and proceed in a logical method – starting with a hypothesis and ending with a conclusion. They must be conducted with the intention of learning about new materials, products or services in a structured and methodical way.
  • Supporting activities are procedures that relate directly to the core activities.
  • Market research, testing or development. This includes sales and promotion.
  • Exploring or drilling for minerals or petroleum.
  • Research in social sciences, arts or humanities.
  • Legal and administrative aspects of patenting or licensing.
  • Modifying or developing computer software

The program falls under the legal jurisdiction of two key pieces of legislation. Division 355 of the Income Tax Assessment Act 1997 and Part III of the Industry Research and Development Act 1986.

 

To calculate, simply multiply the level you are eligible for (38.5% or 43.5%) by your expenditure on R&D activities. For example, if you’ve spent $800,000 AUD, then you would be eligible for a $348,000 return as illustrated below.

Eg. 43.5% (0.435) x 800,000 = $348,000

The R&D Tax Incentive has helped many industries across Australia, including fields like:

  • Biomedical Science
  • Agriculture
  • Medical
  • Pharmaceutical
  • Nanotechnology
  • Engineering

Contact R&D Assist today to find out how we can help you achieve the maximum refund for your business. Email admin@RnDAssist.com.au or call 041-3333-452 for a free no obligation chat.

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