R&D Tax

“The R&D Tax Incentive is a targeted, generous and easy to access entitlement program that helps businesses offset some of the costs of doing R&D. The Program aims to help more businesses do R&D and innovate. It is a broad-based entitlement program. This means that it is open to firms of all sizes in all sectors who are conducting eligible R&D.  It provides more generous support for businesses, especially small and medium-sized firms, than the R&D Tax Concession that it replaced.”

“The two core components are:

  • a 45 per cent refundable tax offset (equivalent to a 150 per cent deduction) to eligible entities with an aggregated turnover of less than $20 million per annum
  • a non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) to all other eligible entities.”

(AusIndustry website)

Via the incentive, companies conducting eligible R&D in Australia are entitled to up to a 45% Federal rebate on their R&D expenses, either as a direct cash refund from the ATO, or as a reduction on the tax liability for profitable enterprises. For companies doing R&D, and particularly for companies with limited funds, this cash refund can be a particularly effective method of R&D support.

In addition, it is worth noting that companies that register their R&D activities for the 2012-2013 financial year may also become eligible to apply for quarterly payments from 1 January 2014 – this is a further benefit of the rebate program to assist companies with managing critical cash flows.

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Eligible R&D Activities

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