Research and Development Tax Incentive
The Research and Development (R&D) Tax Incentive is the federal government’s primary assistance programme for encouraging business R&D and innovation.
Registrations for R&D activity conducted during the YE 30 June 2018 must be lodged by 30 April 2019.
SME’s can sometimes think of claiming tax incentives or grants for R&D as complex and time consuming. However, if claims are able to be adequately substantiated the benefits available are generous.
To be eligible for R&D Tax Incentives you must be:
- incurring eligible R&D Expenditure through a company structure
- conducting an experimental activity where the outcome cannot be determined in advance
- generating new knowledge by developing new or improved;
- Products
- Processes
- Services
- documenting the results of your R&D Activity
Tax Credit: What is a ‘CORE’ Activity?
Are you conducting an EXPERIMENTAL ACTIVITY that is generating new knowledge?
OR
GENERATING new knowledge by developing NEW or IMPROVED
Materials?
Products?
Processes?
Devices?
Services?
YES
Is it conducted as a “systematic progression” of work based on science principles?
AND
Does it proceed from hypothesis to experiment, observation and evaluation, and lead to logical conclusions?
YES
Is the outcome unable to be determined in advance based on current knowledge, information or experience?
YES
Your company may be eligible for the R&D Tax Incentive. We have also put together a R&D Tax Incentive Substantiation Checklist which you may find useful.
Companies engaged in R&D may be eligible for the following tax benefits:
- companies with group turnover less than $20 million receive a 43.5% refundable tax offset which provides the following for eligible expenditure depending on a company’s tax position:
- 43.5% cash refund to the extent the company is in tax loss
- 16% tax saving/refund if the company is in a tax payable position
- companies with group turnover exceeding $20 million receive a 38.5% non-refundable tax offset which provides the following for eligible expenditure:
- 8.5% tax saving
Client Success Story
Imagine Accounting are a Chatswood small business accountant. We are award winning and one of the best small business accountants in Sydney. We specialise in helping small businesses achieve more time, less tax, better cashflow and more impact. Some of our clients have utilised the R&D Tax Incentive. This has been across a variety of different industries such as mobile apps, locomotive and software. For these clients, utilising the R&D Tax Incentive has resulted in significant cost savings.
More information is available from: www.business.gov.au/assistance/research-and-development-tax-incentive
