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The Research & Development (R&D) Tax Incentive is a targeted, generous and easy to access entitlement program that helps businesses offset some of the costs of doing R&D. The program aims to help more businesses do R&D and innovate. It is a broad-based entitlement program. This means that it is open to firms of all sizes in all sectors who are conducting eligible R&D.

The Tax Incentive program provides generous benefits for eligible R&D activities and has the following core components:

  • a 45% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million; and
  • a 40% non-refundable tax offset for all other eligible entitles.

Eligible R&D activates are divided into two categories: core and supporting R&D activities. Core R&D activities are the part of the work where the company tries to do or make something that hasn’t been done before and cannot be done without experimenting. Supporting R&D activities are company activities that directly support related to the core R&D work.

If your company is an R&D entity and you want to claim an R&D tax offset in your company’s income tax return, you must first register your R&D activities with AusIndustry. You must lodge an application for registration:

  • for every income year you want to claim the offset
  • by 30 April of the income year
  • prior to claiming the R&D tax offset in your company income tax return.

In order to claim the R&D tax incentive, you must keep specific records that demonstrate the relationships between your expenditure and your R&D activities. There are two types of record keeping required for the R&D Tax Incentive:

  • activity based record keeping (eg business plans and approvals, technical project documents)
  • expenditure based record keeping (eg timesheets, general ledger entries and invoices verifying the amount incurred on R&D activities).

Finally, you claim the R&D Tax Incentive tax offset by completing a Research and Development Tax Incentive Schedule and relevant labels of the company tax return and lodging them with the ATO.

If you need help with R&D application for registration contact one of our accountants at The Quinn Group on 02 9223 9166 or fill out an online enquiry.

Enquire today and we will get back to you next business day.