Research and Development Tax Incentive 2012/13
Are you eligible for the R&D Tax Incentive?
Can you claim a tax rebate for your R&D?
The R&D Tax Incentive for the 2012/13 tax year is open from 1st July 2013 for applications until 30th April 2014 (for 30th June year end companies).
It provides a 45 per cent refundable tax credit to companies with an aggregated turnover of less than $20 million and a 40 per cent non-refundable offset to all others.
The R&D Tax Incentive is a broad‐based, market‐driven package to replace the R&D Tax Concession with a tax credit system. The rules around what companies can claim and for which activities has been simplified, with the major differences surrounding foreign-ownership of IP, eligibility of software development, the requirement for R&D plans, the ability for advanced rulings on eligibility and as already mentioned, an increased rate of benefit with many of the expenditure and turnover thresholds removed.
If you are able to answer YES to all the following questions, you are likely to be eligible to claim the R&D Tax Incentive.
If you answer NO to any of the questions you may still be eligible and we recommend you contact us to discuss:
1. Are you a company incorporated in Australia, or a foreign owned with a permanent establishment in Australia? (Trusts are generally not eligible)
2. Have you conducted activities during the last financial year that involved or supported Core R&D activities whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience but can only be determined by applying a systematic progression of work that:
-is based on principles of established science; and
-proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions;
and that are conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
Software Development is subject to the same eligibility tests as other forms of R&D except where the software is used for internal administration by the entity.
3. Do you have appropriate records and evidence of conducting eligible R&D activities to substantiate your claim?
4. Where are the activities being undertaken? If they are being undertaken overseas, you will need to obtain an overseas finding.
5. For whom are you conducting the activities? A company is only entitled to a tax offset for R&D activities conducted ‘for itself’. There are some exceptions to this, where the activities are conducted for associated foreign corporations.
6. Do you have notional deductions of $20,000 or more? If not, have you contracted the activities to a registered RSP, or made a monetary contribution under the CRC program?
Ausindustry’s R&D Tax Incentive Online Eligibility checklist is now available
How to claim:
Making a claim is a two‐stage process:
1. Apply for registration through AusIndustry within 10 months after the end of the financial year (i.e. by 30 April for 30 June end of financial year companies). Treadstone uses the electronic gateway with Ausindustry for quick registration.
2. Calculate your eligible expenses and fill out the R&D Tax Schedule provided by the ATO. Submit this at the same time as you submit your company tax return or as an amendment. Treadstone will work with your accountant to ensure this process is optimised.
Pre-registration will be available under the process of Advanced Findings. An advance finding is intended to give certainty as to the eligibility of R&D activities under the R&D Tax Incentive. However, an advance finding is not a pre-condition of registration nor does it replace registration. Companies will still be required to register their activities at the end of each income year that the activity was conducted.
Companies who are confident that their activities are eligible do not need to apply for an advance finding.
Alternatively, contact us to find out the easy way to apply for grants.
How can I calculate my claim:
Due to the complex nature of how the ATO works out your claim we have put together our own R&D tax incentive offset calculator. Contact us if you need a copy.
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