The Research and development (R&D) tax incentive provides a tax offset for eligible R&D activities and is targeted toward R&D that benefits Australia. It has two core components:
- a refundable tax offset for certain eligible entities
- a non-refundable tax offset for all other eligible entities
AusIndustry jointly with the ATO manage and administer the registration of the R&D Tax Incentive which must be completed every year prior to making a claim on your company tax return.
An R&D entity is a corporation that is incorporated under an Australian law or in certain circumstances incorporated under foreign law.
Eligible entities are entitled to receive the R&D tax offset for an income year if their deductions are at least $20,000 and have been approved as R&D notional deductions.
The 45% refundable tax offset is claimed against the income tax of the entity and applied after all other tax offset. If there is an excess of tax offsets, the entity will be entitled to a refund.
The non-refundable 40% tax offset is applied after all other tax offsets and the entity is eligible to carry forward the non-refundable tax offset to future years.
If you wish to discuss the R&D tax offset in further detail, please don’t hesitate to contact us.
Kristina Brown – Accountant