A clear and easy Q&A for companies seeking information on the R&D Tax Incentive.

What is the R&D Tax Incentive?

The R&D Tax Incentive is a program that gives money back to companies that conduct Research and Development in Australia. R&D is when you try to create new or improved products, services, or processes. The program has two types of tax offsets. If your company’s annual aggregated turnover is less than $20m, the refundable tax offset is at a rate of 43.5%. Or if your company’s annual aggregated turnover is above $20m, then this changes to a non-refundable tax offset that ranges to be between 8.5% to 16.5% more than your company tax rate. A tax offset is like a discount on your tax bill. The more R&D you do, the bigger the discount you get. Click here to learn more about R&D Tax Incentives.

How does R&D Tax Incentive work?

To claim the tax offset, you must follow some steps: Firstly, check if your company and your R&D activities qualify for the program; secondly, register your R&D activities with AusIndustry; thirdly, after receiving the Notice of Registration, report your R&D expenses and claim the tax offset in your income tax return with the ATO. The criteria to adhere to and the application process is complex. It has legal and binding requirements. It makes sense to engage an expert to assist you in successfully negotiating the process. BridgePoint Group has a team of experts in the field, with 100% success rate for over 300 clients. Click here to know more about our R&D Tax Incentive service and other Government Grants.

What type of businesses can claim R&D Tax Incentive?

The R&DTI program is designed for Proprietary Limited Company (Pty Ltd) and Public Company (Limited) only. No other business organisation type such as Sole Trade, Partnership or Trust can claim the R&D Tax Incentive.

What is the deadline to claim R&D Tax Incentive?

The R&DTI can be claimed annually following the end of the financial year. Your company has file its paper work within 10 months of financial year end. Normally, for companies with a 30 June year end, the deadline runs up to the 30th of April the following year. If a company doesn’t get their up to that date, then they miss out. The regulatory bodies have made the guidelines crystal clear on lodgement deadlines. Click here to know more about early R&D claims.

Is R&D Tax Incentive a cash refund?

Yes. The ATO pays via EFT into your business bank account.

Is R&D Tax Incentive taxable?

No. Any cash refund received is not considered as assessable income. The cash is the company’s to keep and reinvest into further R&D.

Can I claim R&D overseas expenses?

The R&DTI aims to incentivise Australian companies to conduct Research and Development activities onshore. However, under certain circumstances, R&D activities conducted overseas may also qualify. To be eligible for this benefit, companies must submit an Advance Overseas Finding Application prior to the end of the financial year for which it wants to make a claim. To make a finding that R&D activities conducted overseas are eligible, one must meet certain conditions. Learn more about overseas R&D expenses in this article.

What can I claim for R&D Tax Incentive?

Tax legislation broadly defines R&D within its context to apply to many different industries. It’s best to not assume one way or another and to seek professional advice from someone who can steer you in the right direct. It’s such a wide ranging. It’s better to pick up the phone and have a 30-min FREE consultation with Alan Baghdasarayan, Government Grants & Incentives Director, for a more tailored chat.

Is a software development considered R&D expenses?

Yes, the development of intangible assets still qualifies for R&D. For software R&D claimants, clearer guidance regarding AusIndustry’s perspective on what is considered internal administration. Or better yet, call a professional who can summarise the rules for you.

If you need any assistance or advice, please reach to Alan Baghdasarayan, Government Grants & Incentives Director at BridgePoint Group to utilise his expertise and experience in securing R&D tax cash refund for innovative Australian businesses. 

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