TCF NEWSLETTER | 12.06.2020
Reductions unlikely to affect 19/20 year claim lodgements
The controversial changes to reduce benefits under the R&D Tax Incentive (RDTI) have been further delayed. The Senate Economics Legislation Committee was originally scheduled to conduct public hearings before delivering their report in April 2020. As an outcome of the COVID – 19 pandemic, public hearings will be held over the coming months with the committee’s report now expected to be delivered in December.
The Coalition government originally intended to pass the legislation for applicability to the 19/20 financial claims lodged in the 20/21 tax year, however, as a result of this latest delay, any proposed changes cannot be passed as Parliament won’t resit until February 2021 after which most claimants would have already accessed the existing benefits.
This would indicate that any changes made would not be retrospective – the very point that the Treasurer Josh Frydenberg would not confirm. We do however expect the RDTI offset rates to remain the same for 19/20 Tax claims.
What does this mean for you ?
- Refundable (Turnover less than $20m): Your R&D offset rate for 20/21 will remain at 43.5%. This equates to a 16% benefit above the company tax rate for notional deductions.
- Non-Refundable (Turnover greater than $20m – $50m): Your R&D offset for 20/21 will remain at 38.5% but as an outcome of the reduction in company tax rates top 27.5% the additional benefit equates to 11% above the company tax rate.
- Non-Refundable (Turnover greater than $50m): Your R&D offset for 20/21 will remain at 38.5%. This equates to an additional benefit of 8.5% above the company tax rate
The future of the bill beyond December is uncertain
While the Government has committed to the new measures and a focus on reduction in R&D spend, the opposition has stated they “want a real and genuine engagement with the stakeholders who are going to be impacted” (Brendan O’Connor, Shadow Industry Minister).
The community response to these changes remains the same. Nearly 100 submissions were received during the initial phase of the Committee review of which nearly all were critical of the new measures.
If successful, the new measures are likely to apply to the 20/21 R&D claims.
TCF can assist with free, no obligation services such as:
- Determining R&D Tax Incentive eligibility
- Health check on current R&D Tax Incentive claims
- Business scope to assist in accessing other current and future grants
- Eligibility assessment for a Prepayment on your R&D Tax Incentive
Gerry Frittmann and the team at TCF Services