R&D tax incentive for Australian businesses

The Australian Government’s R&D tax incentive provides targeted offsets that aim to encourage more companies to engage in R&D, in order to contribute to a stronger economy.

The incentive is designed to encourage research and development activities that companies may not otherwise do due to uncertain returns and risk.

What’s involved?

The R&DTI offers two levels of tax offset depending on your aggregated turnover:

  • a 43.5% refundable tax offset for eligible companies whose annual aggregated turnover is less than $20 million.
  • a 38.5% non-refundable tax offset to eligible companies whose annual aggregated turnover is more than $20 million. (entities may be able to carry forward unused offset amounts to future income years).

Who is eligible?

The R&D Tax Incentive is a self-assessment program.

  • Companies must be incorporated and pay tax in Australia.
  • To be eligible, R&D expenditure must be greater than $20,000.
  • Eligible R&D activities are activities where the outcome of the R&D can’t have been known or determined in advance. They should be carried out in a scientific way and companies must keep records to show that the activities meet the legal requirements of the program.
  • Companies must conduct at least one activity that meets the definition of a ‘core R&D activity’ as set out in the program legislation.

To apply, your R&D activities must be registered with the Department of Industry, Innovation and Science for approval. You can apply to register within 10 months of the end of your company’s income year. You may then receive a tax offset when you lodge your Company Income Tax Return.

To find out whether your activities meet the legislated criteria talk to us or visit the Department of Industry, Innovation and Science.

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