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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.