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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.
The R&D Tax Concession is the Commonwealth Government's main mechanism to increase the quantum of core R&D undertaken by Australian business.
Benefit
The Tax Concession Scheme offers the following benefits:
(1) A 125% deduction on eligible investment expenditure relating to R&D activities;
(2) A 175% premium deduction for additional R&D over a 3-year rolling average; and
(3) An option for smaller companies to claim the concession as a rebate (R&D Tax Offset).
The role of administering the concession is divided between:
- the Commissioner for Taxation, who determines the eligibility of the expenditure under the various legislative provisions of the ITAA; and
- the Industrial Research and Development (IR&D) Board, which has legislative responsibility for administration of the Concession and for maintaining the program. Its functions include registration of eligible companies and determination of eligible activities.
How do you access the Tax Concession?
Gaining access to the concession is accomplished in two stages:
(1) registration by the IR&D Board; and
(2) claiming the R&D Tax Concession as part of a tax return.
Annual registration of R&D activities with the IR&D Board is a prerequisite for claiming the Tax Concession. In addition, registration applications must be lodged annually within ten (10) months after the end of the company's year of income.
Before claiming the Concession, companies must satisfy themselves that:
(a) they are registered for that year of income;
(b) they meet the threshold test; and
(c) they have undertaken the R&D on their own behalf.
The TCF Way
TCF Services provides a value-added approach to the R&D Tax Concession. Our specialist assistance and advice ensures maximisation of returns in accordance with legislation.
Our service incorporates assistance with all aspects of the R&D Concession, including: R&D plans; setting up systems to capture eligible expenditure; training; preparation of documents as well as registration and electronic lodgement with the IR&D Board.
TCF Services’ unique approach and value added product offering will ensure that participants in the Tax Concession Scheme maximise their entitlement.
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| 30 Apr 2010 |
R&D Tax Concessions: Registration closes for the 08/09 year for June 30 balancing companies. |
| 2 Nov 2010 |
R&D Tax Concessions: Registration closes for the 08/09 year for 31 December balancing companies. |
| 1 July 2010 |
R&D Tax Concessions: Registrations open for claimants for the 09/10 year. |
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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
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