Tax concessions for R&D investments

Australia's R&D tax legislation underwent a major change in 2011 aimed at boosting R&D activity. The R&D tax incentive provides the following benefits for businesses undertaking R&D in Australia.

45% refundable tax offset

  • Applies to eligible businesses with group annual turnover below A$20 million.
  • The net benefit is 15 cents per eligible R&D dollar.
  • For tax-loss entities, unused R&D tax credits may be refunded as cash.

40% non-refundable tax offset

  • Applies to eligible businesses with group turnover of A$20 million and above.
  • The net benefit is 10 cents per eligible R&D dollar.
  • Unused R&D tax credits may be carried forward into future income years.

Eligible companies

  • Those incorporated under Australian law.
  • Foreign companies resident in Australia for tax purposes.
  • Foreign companies resident in countries with a double tax agreement with Australia and which conduct business through the permanent establishment of a body corporate in Australia.

Expenditure limits

  • Eligible companies accessing the R&D Tax Incentive have no limit on their R&D expenditure.

Multinational groups

  • The R&D Tax Incentive will be available for R&D undertaken in Australia on behalf of a related foreign company.

Software

  • Software development is included within the R&D tax scope but is subject to certain exclusions.

Registration process

  • A registration deadline of 10 months after the end of a financial year applies to all R&D projects.

Advanced findings

  • Provides certainty for organisations, enabling them to validate their R&D activities before registration.

Limited amendment period

  • The Commissioner of Taxation has up to 4 years to revoke a finding or amend a claim under the R&D Tax Incentive.

The R&D tax incentive is jointly administered by AusIndustry and the Australian Taxation Office.

Tax incentive reference – KPMG
Carbon Nexus partner consultancy, KPMG, has the largest R&D tax service practice in Australia and has been advising clients across all industries for over 25 years. KPMG holds industry briefing sessions and individual client assessment meetings as required.

Disclaimer
KPMG's Tax practice is not licensed to provide financial product advice under the Corporations Act and taxation is only one of the matters that must be considered when making a decision on a financial product. You should consider taking advice from an Australian Financial Services Licence holder before making any decision on a financial product.

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