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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).
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:
Contact R&D Assist today to find out how we can help you achieve the maximum refund for your business. Email [email protected] or call 041-3333-452 for a free no obligation chat.
We specialise in R&D claims and assisting clients with an annual turnover below $20 million every step of the way to optimise their R&D process from:
R&D claim preparation, compliance and lodgement; and /or
Tax Return preparation, compliance and lodgement
We charge on a no win no fee basis.