The R&D Tax Incentive deadline for businesses with 30th June year end (FY20) is 30th April 2021. The prior year deadline was extended but this year will not.
Changes coming up:
1. Online Registrations for FY21:
FY21 registrations will be through an online portal managed by AusIndustry. This will include a range of new questions that were not in the “Smart PDF” registration form. See changes to the RDTI application form. The new form and questions make the registration details more granular and focussed on the specific R&D activities undertaken. This is to improve the integrity and quality of information entered.
2. Rates for FY21
FY21 R&D tax incentive rates remain at 43.5% for entities with <$20m and 38.5% for entities with >$20m. However corporate tax rates for business under $50m will be reduced from 27.5% to 26%. This will provide a small benefit to profitable business as a result of add back of expenses.
3. Rates for FY22 (October 2020 budget changes)
As announced in the October 2020 Federal Budget in response to the Coronavirus, the Government announced a number of measures in support of businesses conducting R&D.
a. For businesses with less than $20m turnover, incurring expenses after 1st July 2021 (FY22), the R&D tax incentive rates will now be pegged at 18.5% above the company tax rate for entities Combined with the decrease in company tax rates down to 25% for businesses under $50m turnover, this results in no change to the R&D tax rebate of 43.5%. However for business in that are in profit, the net benefit will be an increase in effective benefit up to 18.5% (from 16% in FY20 and 17.5% in FY21).
b. Maximum expenditure is raised from $100m to $150m.
c. For businesses with aggregated turnover of greater the $20m, a tiered intensity non-refundable rebate will be introduced. For R&D expenditure between 0% to 2% of total expenses the benefit will be 8.5% and for R&D expenditure over the 2% of total expenditure the benefit will be 16.5%. See table below:
|Tier||R&D intensity range||Intensity premium|
|1||Notional deductions representing up to and including 2 per cent of total expenses||8.5 percentage points|
|2||Notional deductions representing greater than 2 per cent of total expenses||16.5 percentage points|
Am I eligible for the R&D Tax Incentive?
To be eligible for the R&D tax incentive you must:
- be a company incorporated in Australia, or a foreign owned with a permanent establishment in Australia? (Trusts are generally not eligible)
- have conducted activities during the last financial year that involved or supported Core R&D activities*
- have appropriate records and evidence of conducting eligible R&D activities to substantiate your claim
- have undertaken your core R&D activities in Australia**
- have conducted the activities ‘for your own behalf’ with usually means you own the IP.
- Have over $20,000 of expenses in the year of claim.
*Core Activities are defined as 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 products, processes, materials, devices or services).
** Overseas R&D activities can only be claimed if you obtain an overseas finding in the year the expense is incurred.
How do I apply?
Contact Treadstone for a free and confidential eligibility check.
If you are eligible we can provide the full service of preparing your registration with Ausindustry and prepare your R&D tax Schedule for the ATO.
Ask us about our R&D tax compliance templates.
We provide expert advice and deliver professional grant applications. Allow us to manage this aspect of your business while you stay focussed on your core business.
To see if you may be eligible for R&D Tax Incentive, Export Market Development Grants (EMDG), or Innovation grants please follow the links below:
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Call us to find out what other grants you may be eligible for on 03 90085937 or email.