A new R&D Tax Incentive scheme has replaced the existing 125% R&D Tax Concession and Offset, the 175% Premium Concession and the 175% International Concession from 1 July 2011.
Refundable R&D Tax incentive for claimants with grouped turnover under $20 million
Where a claimant’s grouped annual turnover is under $20 million, they will be eligible for a refundable tax incentive of 45% of their uncapped eligible R&D expenditure. The tax incentive is firstly offset against any tax liabilities and the balance delivered in cash. This is a significant and material increase from the Tax Concession where claimants in tax loss, with turnovers over $5m and R&D expenditure over $2m have been unable to access the 37.5% Tax Offset. Rather than add a marginal 7.5% Tax Concession to their losses, many companies have declined to claim in recent years. Now at last, they can to free up some cashflow for R&D.
R&D Tax Incentive for claimants 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 incentive, equivalent to a 133% tax concession, again substantial increase on the current scheme.
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 incentive.
The R&D Tax Concession is the Commonwealth Government's main mechanism to increase the quantum of core R&D undertaken by Australian business. It will cease operating after claims for the 10/11 year are finalised and be replaced by the new R&D Tax incentive.
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
- Innovation Australia and their agency Ausindustry,have 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 with Ausindustry; and
(2) claiming the R&D Tax Concession as part of a tax return.
Annual registration of R&D activities with Ausindustry is a prerequisite for claiming the Tax Concession and must be lodged within ten (10) months of 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 are Registered Tax Agents and provide a value-added approach to the R&D Tax Concession. Our specialist assistance and advice ensures maximisation of returns in accordance with the 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 Ausindustry.
TCF Services’ unique approach and value added product offering will ensure that participants in the R&D Tax Concession maximise their entitlement and remain compliant.
