R&D Tax Incentive – Applications for registration of eligible R&D activities undertaken in the 2011-12 income year opened on 1 July 2012.
What are the benefits of the R&D Tax Incentive ?
The R&D Tax Incentive has two core components:
- a 45% refundable tax offset (can be cashed out if adequate tax losses are available) to eligible entities with an aggregated turnover of less than $20 million per annum.
- a non-refundable 40% tax offset (carried forward if the company is in a tax loss position) to all other eligible entities.
Who can apply?
The R&D Tax Incentive is open to all corporations that are incorporated under Australian law and are carrying out eligible R&D activities. Also corporations that are incorporated under foreign law and operate in Australia can also apply under certain conditions.
A body corporate in the capacity of trustee for a public trading trust can the R&D Tax Incentive.
However, trusts, corporate limited partnerships and entities whose entire income is exempt from income tax are ineligible to apply for the R&D Tax Incentive.
What activities can be registered?
The definition of R&D is divided into core and supporting activities.
To qualify under the definition, the Core R&D activities must involve experimental activities and the supporting activities are activities directly related to core R&D activities.
Core R&D Activities
- Their outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:
- based on principles of established science; and
- proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and
- They are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
Supporting R&D activities
Supporting R&D activities are activities directly related to core R&D activities.
However, if an activity:
- is an activity referred to in the core R&D activities exclusions list (e.g. market research, prospecting, quality control, etc); or
- produces goods or services; or
- is directly related to producing goods or services;
the activity is a supporting R&D activity only if it is undertaken for the dominant purpose of supporting core R&D activities.
Further information
To find out if your business qualifies for the R&D Tax Incentive, what costs can be claimed and how to apply, you may contact our office for an obligation free consultation on 03 9555 3551 or [email protected]
The registrations for the 2011-12 income year close on 30 April 2013.
