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R&D Tax Incentive Programme

Overview

This programme aims to provide a tax benefit to companies to help offset some of the cost of conducting eligible research and development activities. It is the government’s key mechanism to stimulate Australian industry’s investment in R&D.

The programme has two core components based on company turnover. For income years from 1 July 2016:
- A 43.5% refundable tax offset is available for eligible companies with an aggregated annual turnover of less than $20 million per year, provided they are not controlled by income tax exempt entities.
- A 38.5% non-refundable tax offset is available for all other eligible companies. Unused offset amounts may be carried forward to future income years.

For income years before 1 July 2016, the refundable tax offset is 45% and the non-refundable tax offset is 40%.

For companies whose eligible expenditure exceeds $100 million for an income year, the tax offset for amounts claimed above $100 million is reduced to the company tax rate.

To claim the tax offset, applicants must:
- Self-assess their eligibility for the R&D Tax Incentive.
- Make sure they keep records as evidence of their eligibility.
- Apply to register their R&D activities with the department.
- Claim the offset through their company’s income tax return.

The deadline for lodging an application to register eligible R&D is ten months after the end of the company's income year. This means:
- A company with a standard income period of 1 July  to 30 June must lodge its registration application with the department by 30 April.
- A company with a non-standard income period of 1 January to 31 December must lodge its registration application with the department by 31 October.

After the deadline, an extension of time to register a late application may only be granted if the reason for an extension was not the fault of the company (or it's agents and advisors) and not within its control. A company must submit a written request for an extension of time to submit a late application.

Applicants must lodge an application for registration for each year in which their company wishes to claim the R&D Tax Incentive.

Who Can Apply?

Eligible applicants must be an R&D entity. A company is an R&D entity if they are a corporation that is any of the following:
- Incorporated under Australian law.
- Incorporated under foreign law but an Australian resident for income purposes.
- Incorporated under foreign law and are both:
a) Resident of a country with which Australia has a double tax agreement, including a definition of 'permanent establishment'.
b) Carrying on business in Australia through a permanent establishment as defined in the double tax agreement.

Companies are not eligible for an R&D tax offset if they are:
- An individual
- A corporate limited partnership
- An exempt entity (where your entire income is exempt from income tax)
- A trust (with the exception of a public trading trust with a corporate trustee)

R&D entity may also need to consider the special rules applied to consolidated groups and R&D partnerships. Other conditions may also apply, depending on whom the R&D activities are being conducted for.

Please refer to the website for the complete eligibility requirements.

Eligible Activities

Eligible R&D activities are either:
1. Core R&D activities
- Experimental activities whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:
a) Is based on principles of established science.
b) Proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions.
- Experimental activities that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).

2. Supporting R&D activities
- Activities directly related to core R&D activities.
- The activity is a supporting R&D activity only if it is undertaken for the dominant purpose of supporting core R&D activities.

Main Assessment Criteria

The R&D Tax Incentive is a self-assessment programme. This means that applicants are responsible for assessing whether their company and the R&D they are conducting meet the eligibility requirements of the programme. In order to register and claim the R&D Tax Incentive, applicants will need to address the following questions:
- Is the company an eligible ‘R&D entity'?
- Have they undertaken eligible ‘R&D Activities’?
- Can they identify eligible expenditure incurred or assets used in the activities?
- Have they kept records which describe:
a) What they did?
b) The expenditure they are claiming for?
c) The assets used?
d) The connection between the expenditure incurred, the assets used and the activities conducted?

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Documentation Uploaded
Guide to Interpretation 2018-01-19 Download
Simplified Worked Examples 2018-04-30 Download
Factsheet - Eligibility of Activities 2018-06-01 Download
Application Notes for Registration of Activities Form 2018-06-01 Download
Application Notes - Advance Overseas Finding 2018-06-01 Download
Compliance Readiness - The Importance of Record Keeping 2018-06-01 Download
Fact Sheet - Budget 2018-19 2018-10-31 Download

Use these documents as a guide only - always get the latest direct from the Administrator

Add to
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Category
Business
Dates
Status Open
Closing Information
This programme is open on an ongoing basis. Please see the Overview for the closing details.

Value
Funding Type Tax Offset
Max.Funding $10M(Est)
Co-contribution No
Competitive No
Eligible Activities
Activities
Manufacturing
Innovation and R&D
Environment and Sustainability
Who Can Apply?
Location
National
Overseas
Industries
General - Non-Industry Specific
Difficulty Rating
Administrator
Tier Federal
Department
Department of Industry, Innovation and Science
Contacts
Program Administrator
AusIndustry and Australian Tax Office (ATO)
Telephone
132846
Email
https://www.business.gov.au/Contact-us
General WebsiteVisit
Program Website Visit