What is the R&D Tax Incentive
The R&D Tax Incentive is designed to encourage small and large businesses to conduct R&D that may not have otherwise done so by providing cash rebates and tax liability reductions.
Last tax year almost 15,000 Australian companies registered for R&D tax incentive with a budget of about $3.0 billion delivered in rebates. Treadstone is one of Australia’s leading R&D consulting firms provide a full-service helping businesses maximise their R&D tax rebates.
The ATO and Austrade administer the incentive jointly across a wide range of industries and activities to promote competitiveness and productivity in the Australian economy.
How much can I get? FY23 R&D Rebate rates
The R&D Tax Incentive has 2 levels of rebates depending on you company turnover
- For businesses with less than $20m turnover, incurring expenses after 1st July 2022 (FY23), the R&D tax incentive rates are pegged at 18.5% above the company tax rate for entities Combined with a company tax rate of 25% for businesses under $50m turnover, this results in an 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% due to add back of the R&D expenses.
- For businesses with aggregated turnover of greater the $20m, there is a tiered intensity non-refundable rebate. 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 (Over $20m turnover)||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|
The R&D tax basics:
- Companies in a loss position can apply and receive a cash rebate.
- You must register your activities within 10 months of the end of your company financial year (usually 30th April) to be able to claim.
- Documentation of test results must be kept. i.e. emails, results, external consultation, project documentation and software repositories
How to apply:
Registrations for R&D Tax are now made through the AusIndustry R&D tax portal.
This will require you to logon using MyGOVID access.
You will need to be able show that you own the IP generate by your R&D and have kept records of tests and expenses that meet the definitions in Div 355 of the Income Tax Assessment Act 1997. See our section on basic record keeping for R&D tax.
R&D Tax Consultants (your competitive advantage)
Treadstone has been helping clients with R&D tax incentive since 2009. Working with us means you get the maximum rebate you are entitled to with the minimum risk and effort. We provide a full R&D tax service starting with documentation of the technical activities and reviewing all eligible aspects of your R&D activities, registering with AusIndustry, preparing your R&D tax schedule with the ATO and providing support to resolve any audit or compliance issues post registration.
We also provide quarterly reporting and compliance reviews prior to registration for speedy applications. To ensure you get a quick result contact us before your end of financial year.
You must use a registered tax agent if you want a consultant to complete your R&D Tax Incentive registration. Treadstone is a registered tax agent for R&D tax.
R&D bridging finance available
If you need your rebate in a hurry we can facilitate an R&D rebate loan to put money in your pocket while the ATO process your return. If you want to borrow funds to accelerate your R&D for up to 12 months in advance we can facilitate your loan. Call us to find out more.
ESIC 100 point checklist for early stage investor tax offset
For an investor to be entitled to the early stage investor tax incentives, the company must qualify as an early stage innovation company (ESIC) immediately after the new shares are issued to the investor. One way to do this is through the ESIC 100 point checklist. Tax incentives include a 20% non-refundable investor tax offset and a CGT benefit when shares are disposed of between 1 -10 years.
To find out more please contact us on Melb: (03) 9008 5937, Syd: (02) 8378 2520 or email us.