The R&D Tax Incentive Program replaces the previous R&D Tax Concession for research and development in income years commencing on or after 1 July 2011. It provides generous financial benefits for eligible research and development activities (R&D activities). The two components of the program are:

  • a 45 per cent refundable tax offset for eligible companies with an aggregated group turnover of less than $20 million per annum; or
  • a non-refundable 40 per cent tax offset for all other eligible companies

Claiming the benefits of the R&D Tax Incentive is a two stage process, involving:

  1. Registration with AusIndustry of the eligible R&D activities that were undertaken during the previous financial year. It is essential that the Application for Registration be prepared and lodged with AusIndustry within 10 months of the company's balance date (ie 30th June or 31st December) otherwise it is not generally (unless there are extraordinary circumstances) possible to claim the R&D Tax Incentive.
  2. Once the AusIndustry - Innovation Australia Registration Number has been received, the Research and Development Tax Incentive Schedule for the relevant financial year can be completed and provided to the company's external accountant and taxation advisor for lodgement of the company's taxation return with the Australian Taxation Office.

For companies, including those belonging to a consolidated group for taxation purposes, with a turnover of less than $20 million, are eligible to receive a refundable tax offset of 45 cents in the dollar for their eligible R&D activities, if they are in a tax loss situation.

 

This benefit can not only greatly assist such early growth companies in recouping their previous R&D activities, but also meet their existing taxation obligations to the ATO.

 

For other profitable companies not able to receive the refundable tax offset and cash out their R&D Tax Incentive claim, they will be eligible to receive a non-refundable 40 per cent tax offset to be applied against their existing ATO obligations or for future years commitments to the ATO.

 

All necessary documentation for claiming the R&D Tax Incentive is personally prepared by the principal of the practice who assumes personal responsibility for preparing project descriptions and financial information by relevant category up to lodgement of final claim with the ATO.

 

This total "hands on" ensures that the client is at all times dealing with the individual responsible as being the nominated contact person with the relevant government agency for processing of the R&D Tax Incentive claim. (This is in marked contrast with other R&D Tax Incentive providers where much of this compliance work is delegated to more junior staff members.)

 

Under the R&D Tax Incentive program, there is a requirement to delineate between core and supporting activities in the formal Registration Application to AusIndustry. This task, including allocation of eligible R&D expenditure to be allocated between core and supporting activities, will be prepared on behalf of your company by the principal of the practice.

 

To be eligible to claim the R&D Tax Incentive, are the following corporate structures:

  • a company incorporated under Australian Law;
  • a company incorporated under a foreign law that is an Australian resident for tax purposes; or
  • a company incorporated under a foreign law that is a resident of a foreign country with a double tax agreement with Australia and who carries on business through a permanent establishment of the body corporate in Australia.

Trusts are generally not eligible for tax benefits under the R&D Tax Incentive. The one exception is a body corporate acting as trustee of a public trading trust.

 

Should any of the R&D activities be undertaken overseas, it will be necessary to obtain an overseas finding of these activities prior to lodging the claim.

 

Our practice is well placed to advise our clients on how to prepare claims under the R&D Tax Incentive, as there are significant compliance requirements that form the rules governing the processing of the R&D Tax Incentive by the relevant Commonwealth Government agencies. 

 

Please contact us with any queries that you may have regarding this practice specialist area



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