Wilson CA assist a number of established and start up businesses with their R&D Tax incentive requirements. The firm understands the importance of the tax incentive in stimulating and driving innovation.
Jointly administered by Ausindustry and the Australian Taxation Office (ATO), the R&D Tax Incentive assists Australian companies with the costs of performing R&D related projects within Australia.
Benefits of the R&D Tax Incentive
From July 1 2021 onward, the r&D Tax Incentive provides the following benefits:
- R&D entities with aggregated turnover of less than $20 million are entitled to a refundable-tax offset that is fixed at 18.5 percent above the company’s tax rate.
Should the tax offset exceed the entity’s tax liability, the balance is paid to theentity as a refund.
- ForR&D entities with aggregated turnover of $20 million or greater, the non-refundable tax offset will be set at the company’s tax rate plus 8.5 percent above for R&D expenditure between 0 and 2%R&D intensity, and 16.5 percent above for the portion of R&D expenditure above2% R&D intensity.
R&D intensity is the portion of the company’s total expenditure that is identified as being R&D expenditure.
What is the process?
Applying for the credit is a two-step process;
- An annual R&D registration form is submitted electronically with Ausindustry. This form details the project(s), activities and qualitative information of R&D project(s). Upon successful processing, Ausindustry will issue a R&D registration number.
- The R&D schedule to be included within the company’s tax return is compiled and includes Ausindustry’s registration number. Once the company’s tax return is lodged the ATO will issue any refund or apply and tax offset due in approximately two to four weeks.
Overseas company's investing in Australia
Australian companies who are subsidiaries of overseas entities investing in Australian based R&D projects are also eligible for the R&D tax incentive.
R&D related costs incurred by an Australian based subsidiary, that are funded by the overseas holding company, are eligible for inclusion within the company’sR&D Tax claim.
Advanced Findings
Companies who look to undertake overseas R&D expenditure or would like a level of certainty that activities being undertaken satisfy Ausindustry’s R&D eligibility criteria, can apply for an advanced finding.
Advanced findings are submitted to Ausindustry prior to the end of a financial year and are largely submitted for two reasons;
- Approved advanced findings provide piece of mind that activities a company is undertaking (or planning to undertake) are in fact eligible R&D activities; and
- Advanced Overseas findings also allow companies to seek approval on planned or incurred international R&D related expenditure.
To learn more contact the team at Wilson CA today.
