Innovation is the lifeblood of any thriving business. But let’s face it: research and development (R&D) isn’t cheap. From experimental development to the salaries of your brilliant minds, the costs can quickly pile up. Thankfully, many governments recognise the importance of R&D and offer generous research and development tax incentives to lighten the load. But the burning question remains: how much can you claim?
Calculating the Claim Amount
Calculating your claim amount will depend on the specific tax incentive scheme applicable to your business. Some schemes offer a tax credit based on a percentage of eligible expenses, while others provide a deduction from taxable income.
- Tax Credits: These directly reduce your tax liability. For example, if you have eligible R&D
expenses of $100,000 and the tax credit rate is 20%, you could claim a $20,000 tax credit. - Tax Deductions: These reduce your taxable income, reducing your tax liability. The value
of the deduction depends on your tax bracket.
Eligibility and Qualifying Activities
In calculating your research & development tax incentive, you must first determine your eligibility.
The first hurdle is determining whether your activities qualify for the R&D tax incentive. Eligible
activities include: - Employee salaries and wages directly related to R&D.
- Consumable materials used in R&D activities.
- Payments to contractors for R&D services.
- Certain overhead costs are directly attributable to R&D.
The amount you can claim for your R&D tax incentive application depends on many factors. By
understanding the factors mentioned, you can unlock the full potential of research and
development tax incentives and fuel your company’s innovation.
Consult R&D Assist Today!
Need help with your R&D application? Contact R&D Assist. We can provide consultations and help you lodge your application. Our expert accountants have your back!