Might be time to relook at Australia’s R&D tax incentive?
In a bid to incentivise research and development (R&D), the Australian government allows companies to claim up to $100 million of R&D expenses, gaining a 45% refundable tax offset for businesses with less than $20 million in annual revenue.
The R&D incentive is jointly managed by the Australian Taxation Office (ATO) and AusIndustry with two core components:
- a refundable tax offset for certain eligible entities with an aggregated turnover of under $20 million, and
- a non-refundable tax offset for all other eligible entities
Small businesses probably won’t be able to claim the full $100 million, but they are entitled to an R&D tax offset when they claim at least $20,000 in a year. Eligible expenses include spending on research and development, the cost of transforming goods or materials during R&D and for the decline in value of assets during R&D.
How your business can claim the R&D tax break
The incentive requires that you self-assess your eligibility to register your R&D activities and claim tax offsets in any given year. To be eligible to claim the R&D tax incentive, generally your total notional deductions must be greater than $20,000 which cannot be claimed for any business-usual activities, activities or expenditure unrelated to your research and development activities. Additional resources which are available are as follows:
- The ATO’s checklist helps you initially determine if your R&D activities relating to IP and patents might be eligible for a tax incentive.
- Keep accurate records so you can claim. Not only does this make good business sense, but it’s required and both the ATO and AusIndustry share the information they receive about the incentive.
- You can also seek advice from a registered tax agent like OBT Financial Group if you need assistance with applying for the incentive.
To find out more about the R&D tax incentive and the activities you may be able to claim, visit the ATO’s website and AusIndustry’s R&D snapshot or call OBT’s friendly Business Solutions team in Gatton on 5462 2277.