R&D Tax Incentive
Applications to register R&D activities for 20/21 FY must be lodged by the 3rd May Deadline
It is important to note that the 3rd May lodgement deadline for the 20/21 financial year R&D activities is looming fast for companies with a standard 30th June reporting year-end. This newsletter serves as your R&D lodgement reminder for May 2022’s deadline. Other entities with a substituted accounting period have 10 months from the completion of their financial year to register. Don’t miss out on your refund, get your 20/21 application in before the May lodgement deadline, contact us for assistance with your claim.
- Rates | Record Keeping Tips | May Lodgement Deadline (20/21) Information
- Export Market Development Grant (EMDG) 22-23
- NSW Export Assistance Grant
- Our Services
The new rates of return are:
- Annual revenue <$20m – Company Tax Rate: 26% – Refundable Tax Benefit: 43.5% (if matched by tax losses) or 17.5% (when trading in profit)
- Annual revenue $20m-$50m – Company Tax Rate: 26% – Non-Refundable Tax Offset: 12.5%
- Annual revenue >$50m – Company Tax Rate: 30% – Non-Refundable Tax Offset: 8.5%
- Annual revenue <$20m – Company Tax Rate: 25% – Refundable Tax Benefit: 43.5% (if matched by tax losses) or 18.5% (when trading in profit)
- Annual revenue $20m-$50m – Company Tax Rate: 25% – Refundable Tax Benefit/2 tier benefit: 8.5% on eligible R&D expenditure which accounts for up to 2% of total company expenses and an additional 16.5% on eligible R&D expenditure exceeding the 2% baseline.
- Annual revenue >$50m – Company Tax Rate: 30% – Refundable Tax Benefit/2 tier benefit: 8.5% on eligible R&D expenditure up to 2% of total company expenses and an additional 16.5% on eligible R&D expenditure exceeding the 2% baseline.
End of Financial year R&D Tax housekeeping tips:
- Pay your associated party R&D fees by 30th June each year – if an entity or contractor is associated in any way with the R&D entity ( i.e. shareholder, director, staff, or associated entity) their fees for R&D services must be paid for by the 30th June in the year of the R&D activity otherwise the ATO will not allow the claimant to drawdown the tax benefit when the tax return is lodged, instead, the unpaid associated party expense must be carried forward in the tax return and only realised when the expense is paid.
- Pay your R&D staff superannuation payments by the 30th June each year – to be eligible to claim the superannuation costs relating to R&D staff requires the superannuation to be paid on or before the end of the financial year. Similarly, late compulsory superannuation payments cannot be claimed in the financial year they apply but can be claimed in the following year when paid.
R&D Tax record-keeping tips:
It is also important to note that the R&D Tax Incentive is a self-assessment program requiring claimants to maintain contemporaneous records that track the progress of their R&D activities and quantify the costs associated with the activities being claimed. If suitable records are not maintained claimants run the risk of having their prior year/s claims rejected if audited and forced to pay back the benefits received plus interest and penalties. Listed below are the types of records that would be appropriate to meet compliance requirements:
- populating an annual R&D project plan which identifies your eligible core and supporting activities
- writing monthly technical reports which report on the conduct of your R&D activities
- completing weekly time-sheets for your R&D staff against eligible activities to calculate the claimable apportionment of time
- taking photos evidencing stages of prototype work and;
- recording technical meetings
- tracking the material costs associated with each trial
Export Market Development Grant (EMDG) 22/23
Under the new EMDG program, eligible SMEs are able to apply for forward grant funding over multiple years to cover eligible marketing and promotional activities.
Grants will target eligible export-ready SMEs with an annual turnover of less than $20 million at three stages of their export journey:
- Tier 1: Eligible SMEs who are new to export – grants up to $80,000 over two years
- Tier 2: Eligible exporters who plan to expand their presence in export markets – grants up to $240,000 over three years
- Tier 3: Eligible exporters who continue to expand into new markets and make a strategic shift in their exporting business – grants up to $450,000 over three years
Applications are due to open in March/ April 2022, with grant agreements issued to applicants by June 30th for marketing activities covering the period 1st July 2022 to 30th June 2025 ( depending on the eligible tier).
The nominal benefit of the new pre-approval EMDG is to provide certainty of finance to exporters as well as faster access to EMDG funds. The intention is for applicants to submit marketing plans for up to three years to enable them to formalise Funding Agreements with Austrade, identifying which of their proposed export marketing expenses will be supported, with payments to be made by Austrade on a milestone basis. The EMDG program is an entitlement program.
NSW Export Assistance Grant
If you are an exporting business, or if you were exporting goods or services before the impacts of COVID-19, bushfires or drought, you may be eligible for an export assistance grant of up to $10,000.
This grant helps eligible export businesses in NSW access global markets. Funds can be used for:
- marketing materials
- website internationalisation
- pivoting to online delivery (for example, converting face-to-face training content to online content for international audiences)
- e-commerce development
- market research
- international tradeshow and trade missions
- inbound business support
- costs to support compliance/localisation of products for export
- costs to protect business in international markets.
This grant will be provided as reimbursement of 50% of eligible expenses, up to a maximum of $10,000 per eligible business, for expenses already paid since 1 January 2020.
How to Apply
You can submit either one application up to the maximum of $10,000 or multiple applications of a minimum of $2,000 per each application, totalling a maximum of $10,000.
Applications close at 11:59pm on 30 June 2022 or when the allocated funding is exhausted.
To be eligible for this grant, you must:
- be based in NSW
- be currently exporting, or were exporting prior to the impacts of COVID-19, bushfires or drought
- employ a minimum of 3 full-time equivalent workers at the time of application
- own the goods/services to be exported, or be able to provide documented evidence that you are the agreed export supplier
- produce the goods/services to be exported in Australia, or be able to provide documented evidence that the business provides substantial value to NSW
- be an exporting business with an annual turnover of:
- up to $100 million, or
- greater than $100 million that can demonstrate export turnover has declined by more than 30% in the 2019–20 financial year and have an intention to re-establish your export business in your established markets and/or diversify into new markets.
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– Don’t miss the May lodgement deadline for 20/21 FY –
- Scope your potential to claim various grant programs
- Assist with the preparation and lodgement of grant applications
- Review or provide a health check on your internally prepared grant applications
- Establish record-keeping practices as required under various grant programs
- Provide prepayment loans against future cash refunds under the R&D Tax Incentive
- Keeping industry informed on all new Government policy and grant initiatives
Don’t hesitate to give us a call.