A cash payment of up to 43.5% of eligible R&D expenditure is available to selected businesses depending on the turnover of the group and the profitability of the business. For taxpayers who don’t qualify for the cash payment, a reduction in the business’ tax bill of between 8.5% and 18.5% of R&D spend is available. The R&D Tax Incentive is governed by the Income Tax Assessment Act 1997 as well as the Industry Research and Development Act 1986.
The R&D Tax Incentive
CAN I CLAIM
At its most generous the benefit is a cash refund of 43.5% of the business’ R&D expenditure. At its least generous the benefit is a reduction in the business’ tax bill amounting to 8.5% of the business’ R&D expenditure. The maximum amount of claimable R&D expenditure is $150 million per year.
WHAT IS FUNDED
The incentive provides businesses with a tax offset for eligible activities that relate to the R&D of novel products or processes.
Your organisation’s eligible R&D expenditure includes:
- Personnel costs of employees involved in R&D activities;
- Fees paid in the case of contract research / outsourced research; and
- Selected other directly attributable costs.
WHERE MUST I
All R&D activities must physically occur in Australia. In certain circumstances, the expenditure associated with R&D activities conducted offshore can also be claimed through the R&D Tax Incentive, but there are additional criteria that must be satisfied and additional administrative procedures that must be followed for this to occur.
This incentive is jointly administered by AusIndustry and the Australian Taxation Office (ATO) who oversee the eligibility of the R&D activities and expenditure respectively.