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 The R&D tax incentive replaces the R&D tax concession for years starting on or after 1 July 2011. You should consider whether any of the transitional arrangements in this document apply to you or your clients.
We jointly administer the research and development (R&D) tax concession and R&D tax incentive with AusIndustry.
Prior to 1 July 2011, the R&D tax concession allowed companies to claim a tax deduction in their income tax return of up to 125% (and in some cases up to 175%) of eligible expenditure on R&D activities. The R&D tax concession continues to apply and be administered for income years starting before 1 July 2011. As a result, R&D expenditure incurred in respect of R&D activities performed in years prior to 1 July 2011, must continue to be claimed under the R&D tax concession.
The R&D tax incentive replaced the R&D tax concession for years starting on or after 1 July 2011. It provides R&D tax offsets to encourage more companies to engage in R&D.
The R&D tax incentive has two core components:
- a 45% refundable tax offset (equivalent to a 150% deduction) for certain eligible R&D entities with an aggregated turnover of less than $20 million per annum
- a 40% non-refundable tax offset (equivalent to 133% deduction) for all other eligible R&D entities. Unused offset amounts may be able to be carried forward for use in future income years.
If your company has a 'standard' income year beginning on 1 July 2011, your first opportunity to register and claim the R&D tax incentive will be from 1 July 2012. You should consider how the new requirements for registration under the R&D tax incentive will impact upon your accounting, information and record keeping systems from 1 July 2011.
Rules and provisions were introduced with the R&D tax incentive to:
- ensure that, despite the repeal of the R&D tax concession provisions, those provisions can still apply to certain things done (for example, expenditure that has been incurred) before they were repealed
- establish special transitional arrangements to broadly address some situations that extend over income years where the R&D tax concession provisions and the R&D tax incentive provisions apply.
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To find out more about the key differences and similarities between the R&D tax concession and the R&D tax incentive, see The R&D Tax Incentive and the R&D Tax Concession: key differences on the AusIndustry website.
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We provide information about transitional arrangements for:
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AusIndustry provides information about transitional arrangements for:
- registering activities
- assessments by AusIndustry and decisions by Innovation Australia
- existing certificates or determinations
- registering research service providers (previously known as a registered research agency).
For more information on the above transitional arrangements see Transition from the R&D Tax Concession on the AusIndustry website.
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We, along with AusIndustry, provide information in relation to records you may need to keep for the R&D tax incentive.
For more information on records you may need to keep in relation to your notional deductions see Research and development tax incentive - claiming.
AusIndustry has more information on record keeping requirements in relation to your R&D activities, see Keeping records on the AusIndustry website.
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