On 1 July 2012 the Government introduced the R&D Tax Incentive which provides more generous support for businesses than the R&D Tax Concession that was replaced. Under this new legislation, more businesses are eligible to claim generous support that is aimed at increasing innovation and creativity within Australian companies.
The two main elements of the legislation include:
- A 43.5% refundable tax offset (equivalent to a 150% deduction) to eligible entities with an aggregated turnover of less than $20 million per annum.
- A non-refundable 38.5% tax offset (equivalent to 133% deduction) to all other eligible entities.
Example 1: 43.5% refundable ‘cash rebate’
Example 2: 38.5% and 43.5% tax offset comparison
| Example: | No Claim | 38.5% Tax Offset | 43.5% Tax Offset |
| Assessable Income | $200,000 | $200,000 | $200,000 |
| Deduction/ R&D Spend | ($100,000) | ($100,000) | ($100,000) |
| Deductions Claimed/ Forfeited | $100,000 | – | – |
| Taxable Income | $100,000 | $200,000 | $200,000 |
| Gross Tax (30%) | (30%) | (30%) | (30%) |
| R&D Tax Credit | – | $38,500 | $43,500 |
| Net Tax Payable | ($30,000) | ($21,500) | ($16,500) |
| Benefit yield of R&D Spend | – | 8.5% | 13.5% |
Are you eligible for the R&D Tax Incentive? Click here to find out!
Could you survive an AusIndustry Audit? Click here to find out!
AusGrant is a registered tax agent firm and can help you identify an R&D tax opportunity within your business.
AusGrant work with R&D specialist firm Swanson Reed on industry specific R&D tax matters, high-tech advice and assistance with the preparation of R&D tax submissions.
To learn more, Click here to contact your local AusGrant representative.
