FAQ - R&D Tax Incentive

Can I receive my refundable tax offset in quarterly payments?

The Government has announced plans to introduce a quarterly payment system from 1 January 2014 for companies eligible for the 45% refundable tax offset. There is currently no further information, and no rules have been released.

Do I need to register for the R&D Tax Incentive?

Yes, to claim a tax offset under the R&D Tax Incentive program, you must register your R&D activities with AusIndustry within 10 months of the end of the income year in which they were undertaken.

How do I know when an R&D claim has been approved?

Like your income tax, the R&D Tax Incentive is a self-assessment program. As long as your company has lodged its annual registration and can substantiate its eligibility and entitlement, you can claim the tax offset as part of your income tax return. If you require certainty about your eligibility and entitlement, you can apply for an Advance Finding prior to registration.

Is my company eligible to claim the R&D Tax Incentive?

To be eligible to claim the 45% refundable tax offset, your company (or company group) must have an annual turnover of less than $20 million and annual R&D expenditure of at least $20,000. Companies with an annual turnover of more than $20 million and meet the above criteria are eligible for a 40% nonrefundable tax offset.

In addition, the company must be either:

  • incorporated in Australia
  • incorporated in another country but be an Australian resident for tax purposes, or
  • incorporated in a country with which Australia has a double tax agreement, and undertake R&D activities through a permanent establishment in Australia.

Trusts are generally not eligible – except if they are a public trading trust with a corporation acting as a trustee. Companies that are exempt from tax are also not eligible

Find out if your eligible here

Is there a limit to the amount of benefit I can claim?

There is no cap on the level of eligible R&D expenditure. Companies with annual turnover of less than $20 million can claim the 45% tax offset on all their eligible expenditure. Those with annual turnover of more than $20 million can claim a 40% tax offset on all their eligible expenditure.

What sort of businesses can claim the R&D Tax Incentive?

Any business looking to introduce new or improved materials, products, devices, processes or services that have a technical edge or overcome a technical problem may be doing R&D. If that business is funding or creating new knowledge – or expanding existing knowledge – to provide this technical solution, then it is doing R&D. Therefore, this business may be able to claim the R&D Tax Incentive.

The R&D Tax Incentive is specifically designed to assist and encourage companies in the following sectors:

  • Manufacturing
  • Construction
  • Agriculture
  • Biomedical
  • IT
  • Banking and finance
  • Mining and minerals processing

What’s the minimum R&D spend to be able to claim?

To claim the tax offset, your total R&D spend for the income year must be at least $20,000. There are some minor exceptions to this.

When can expenditure on R&D activities conducted overseas be included in a claim?

To claim expenditure on an activity conducted overseas, you must first obtain an Advance Finding that it is an eligible R&D activity. You must also obtain an Overseas Finding that such expenditure can be included in your claim. The application must be made in the first income year that the overseas activities are conducted.

When will the R&D Tax Incentive replace the R&D Tax Concession?

The new program applies to activities undertaken in the income years starting on or after 1 July 2011. Applications to register activities undertaken in the 2011/12 income year open on 1 July 2012.

Why does the government provide a tax incentive for R&D?

Like the previous R&D Tax Concession, the new R&D Tax Incentive aims to encourage Australian businesses to undertake more research, development and commercialisation activities – and thus make them more competitive, create and maintain jobs, and drive economic growth.

If you have further questions about the R&D Tax Incentive, please contact MJA

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