R&D Tax Credits

A new R&D Tax Credit will replace the existing 125% R&D tax concession and rebate offset, the 175% premium concession and the 175% international concession from 1 July 2010. The draft legislation is currently being hotly debated and the new regulations will be available as soon as they are published.

R&D tax credit for companies with grouped turnover under $20 million

Where a claimant’s grouped annual turnover is under $20 million, they will be eligible for a 45% refundable credit (cash payment), with no limit on the amount of claimable expenditure. This is a significant increase, as the current refundable offset has a group turnover cap of $5 m, and an R&D expenditure cap of $1 million with the claimant needing to be in a tax loss.

For the R&D tax credit the turnover limit has been increased to $20 million, and both the expenditure cap and the tax loss requirement have been abolished.

R&D tax credit for companies with grouped turnover over $20 million

Where a claimant’s grouped annual turnover is over $20 million, they will be eligible for a 40% non-refundable tax credit, equivalent to a 133% tax concession, again substantially higher than the current basic rate of support.

Further, companies conducting R&D in Australia where intellectual property rights are held offshore (as for the current international premium R&D concession) can also access this credit.

If you intend to claim R&D Tax Credit benefits, or you haven’t used TCF Services to claim in the past, call us now to learn how we can maximize your return while minimizing the fuss of taking part.

R&D Tax Offset

Under recent enhancements to the R&D Tax Concession program, small firms (SMEs) can now cash out their tax losses and receive grants against allowable R&D expenditure.

Benefit

The Government acknowledges that innovative SMEs taking the risk of engaging in R&D activities gain no benefit from the tax concessions. Instead, assistance is best provided by allowing small companies to cash out their tax losses to receive grants.

This is particularly relevant during the initial growth phase when cash flow is imperative to the success of the project. The benefit is calculated by applying the 125% (tax concession) to the allowable R&D costs (salaries and materials) of the project, from which a 30% (company tax rate) grant is payable. This benefit is equivalent to the value of the deduction available through the R&D tax concession.

Who is eligible to apply?

• Companies with an annual group turnover of less than $5m.
• Grouped R&D expenditure must not be greater than $1m per year, and not less than $20,000.
• Companies must be in a tax loss situation to receive a grant.

• Firstly, by registering with the IR&D Board within 10 months after the end of the company’s financial year; and
• Then claiming the R&D tax offset when filing your annual taxation return.

The TCF Way

At TCF we provided a minimum fuss/maximum return value added approach to satisfying customer expectations when accessing Commonwealth government assistance programs. Our specialist knowledge of assistance programs assures full compliance with grant Scheme legislation, and a higher return to our clients.

Our service offering incorporates a total solution which includes R&D plans, tools to capture eligible expenditure, training and the full preparation of applications and representations to both AusIndustry and the Australian Taxation Office.

Interim 09/10 year provisions boost SME R&D benefits

For the 09/10 year R&D Tax Offset claimants will be able to spend more on R&D expenditure. This limit will be increased from $1 m to $2 million, however the $5 million group turnover limit is expected to remain.

Big boost for SME R&D claimants

Where a claimant’s grouped annual turnover is under $20 million, they will be eligible for a 45% refundable credit (cash payment), with no limit on the amount of claimable expenditure. This is a significant increase, as the current refundable offset has a group turnover cap of $5 m, and an R&D expenditure cap of $1 million with the claimant needing to be in a tax loss. For the R&D tax credit the turnover limit has been increased to $20 million, and both the expenditure cap and the tax loss requirement have been abolished.

If you intend to claim R&D Tax Credit benefits, or you haven’t used TCF Services to claim in the past, call us now to learn how we can maximize your return while minimizing the fuss of taking part.

30 Apr 2010	R&D Tax Offset: Registration closes for the 08/09 year for June 30 balancing companies.
2 Nov 2010	R&D Tax Offset:Registration closes for the 08/09 year for 31 December balancing companies.
1 Jul 2010	R&D Tax Offset: Registrations open for claimants for the 09/10 year.

Registering and claiming for R&D Tax Credit

If you intend to claim R&D Tax Credit benefits, or you haven’t used TCF Services to claim in the past, call us now to learn how we can maximize your return while minimizing the fuss of taking part.

Call Llew or Gerry on (02) 8219 4900