The Research and Development (R&D) tax incentive has two core components
Entities engaged in Research & Development may be eligible for:
- a 45% refundable tax offset for eligible entities, or
- a 40% non-refundable tax offset for all other eligible entities
The ATO and AusIndustry administer the R&D tax incentive jointly.
An R&D entity is either a corporation that is incorporated under an Australian law or, in some circumstances, a foreign corporation.
Generally, only R&D activities conducted in Australia qualify for the R&D tax incentive.
Only R&D activities classified as either core R&D activities or supporting R&D activities are entitled to the tax offset.
An R&D entity may be entitled to an R&D tax offset if its total notional deductions for an income year are at least $20,000 and must be for approved R&D notional deductions.
If the offset is a refundable tax offset a refundable tax offset is applied after all other tax offsets. If there is an excess of tax offsets, your entity may be entitled to a refund.
If the offset if a non-refundable tax offset, it is applied after all other tax offsets. An R&D entity may be able to carry forward a non-refundable tax offset to a later year.
You claim the R&D tax incentive tax offset by completing a Research and Development tax incentive schedule and the relevant labels of the company tax return.
If you would like any more information on the Research and Development tax incentive and whether you may be eligible, please do not hesitate to contact us.
Kyla Dalton – Accountant