Is your company eligible for the R&D tax incentive?
When it comes to research and development, we often think of technology and pharmaceutical companies. But many companies complete research and development activities, and they are often eligible for the Government’s research and development (R&D) tax incentive, which provides financial benefits for company investing in the development (new or improved) products and services.
The R&D tax incentive allows Australian businesses to claim a tax offset or cash rebate for expenditure on eligible activities. It has two core components, including a refundable tax offset for certain eligible entities whose aggregated turnover is less than $20 million and a non-refundable tax offset for all other eligible entities.
Is your company eligible?
You can claim an R&D tax offset if your entity is incorporated under an Australian law, or under a foreign law, but you’re an Australian resident for income tax purposes. You are not eligible if you’re an individual, corporate limited entity or a trust.
Read more about the eligibility requirements.
What activities are eligible?
Generally, only R&D activities conducted in Australia qualify for the R&D tax incentive. However, R&D activities conducted overseas can also qualify under some circumstances.
R&D activities must be classified as either core or supporting R&D activities. A core activity is experimental, where the outcome cannot be known or determined or advanced, whereas a support activity is one that is directly related to a core activity, or, for certain activities has been undertaken for the dominant purpose of supporting a core activity.
Read more about activity eligibility.
How much can you get back?
If your business turns over less than $20 million in revenue and you are in a tax loss position, then up to 43% of your eligible R&D expenditure with be refunded by the Government. If you are in tax profit position then the eligible R&D expenditure will help offset your company’s taxable income.
Want to know more?
Our team of taxation specialists can provide you with the right advice based on your company’s eligibility and business situation. To learn more about the R&D Tax Incentive call PPT on (03) 5331 3711.
