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KEY POINTS ABOUT R&D TAX CONCESSION  (Published  by  Innovation.gov.au on 24 Nov 2010)

The R&D Tax Concession comprises four elements:

1. a tax deduction of up to 125 per cent for R&D expenditure;
2. a 175 per cent Premium tax deduction for increases in R&D expenditure above a rolling three year average;
3. a 175 per cent International Premium for eligible R&D undertaken in Australia, regardless of where the intellectual property is held; and
4. an R&D Tax Offset for companies spending less than $1 million for the year and with a turnover of less than $5 million.

The R&D expenditure cap for the R&D Tax Concession Offset has been lifted from $1 million to $2 million from the 2009-10 income year.

In 2009-10 the estimated revenue forgone of the R&D Tax Concession is $1.56 billion, as reported in the 2010-11 Science, Research and Innovation Budget Tables.

FACTS AND FIGURES

For the 2008-09 financial year, provisionally 8,440 companies were registered for the tax concession; this is a 9 per cent increase on the previous year. Companies reported provisional R&D expenditure of $17.4 billion, an increase of 23 per cent on the previous year.

o   39 per cent of registered companies used the 125 per cent to claim a tax deduction.

o   20 per cent used the 175 per cent Premium to claim a tax deduction

o   34 per cent used the Tax Offset at the 125 per cent

o   7 per cent used the Tax Offset at the 175 per cent rate.

R&D Tax Concession data 1985-86 to 2008-09 (as at 30 June 2009)