FAQ

WHAT IS THE R&D TAX INCENTIVE?

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.

HOW MUCH CAN I CLAIM?

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%.

IS THERE A MINIMUM THRESHOLD FOR THE R&D TAX INCENTIVE?

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

WHAT ARE THE OTHER ELIGIBILITY REQUIREMENTS?

Your business needs to be:

Incorporated under Australian law or

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

WHO ADMINISTERS THE R&D TAX INCENTIVE?

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.

WHAT ARE THE ELIGIBLE R&D 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.

WHAT SORT OF ACTIVITIES AREN’T INCLUDED?

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

WHAT LEGISLATION RELATES TO THE R&D TAX INCENTIVE?

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.

HOW DO I CALCULATE MY R&D TAX INCENTIVE REFUND?

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

WHAT COMPANIES ARE ELIGIBLE FOR R&D TAX INCENTIVES?

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

HOW DO I FIND OUT MORE INFORMATION?

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.