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 AUD 20 Million. If you had an aggregate turnover over AUD 20 million, 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:
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 business’s 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).
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: