Claim R&D Tax credits before 30 April
With the R&D Tax Incentive 30 April 2014 deadline looming, we thought we would take the opportunity to provide you with some further details on the program. For those new to the program, these are some key features and frequently asked questions and for everyone else, this is a reminder that it isn't too late to claim for the year ended 30 June 2013.
What is the R&D Tax Incentive?
Jointly administered by AusIndustry and the Australian Taxation Office (ATO), the R&D Tax Incentive is a Government initiative aimed at assisting Australian companies with the costs of performing R&D related projects within Australia.
Benefits of the R&D Tax Incentive
The R&D Tax Incentive allows a 45% refundable tax credit for entities with under $20 million in turnover, and a 40% non-refundable tax credit for companies with greater than $20 million in turnover.
The size of the credit is based on identified expenditure from R&D related activities during a given financial year.
What is the process?
Applying for the credit is a two-step process:
1. An R&D registration form is submitted electronically with AusIndustry, detailing the activities and qualitative information of R&D project(s). Upon successful processing of the application (generally two weeks), AusIndustry will issue a R&D registration number.
2. The R&D schedule to be included within the company's tax return is then compiled and includes the registration number provided by AusIndustry. Once the company's tax return is lodged, the ATO will issue refundable amounts in two to four weeks.
Overseas companies investing in Australia
Australian companies who are subsidiaries of overseas entities investing in Australian based R&D projects are also eligible for the R&D tax incentive.
R&D related costs incurred by Australian based subsidiaries that are funded by the overseas holding company are eligible for inclusion within the company's R&D Tax claim.
Companies who look to undertake overseas R&D expenditure, or would like a level of certainty that activities being undertaken satisfy AusIndustry's R&D eligibility criteria can apply for an advanced finding. Advanced findings are submitted to AusIndustry prior to the end of a financial year and are largely submitted for two reasons:
1. To provide peace of mind that activities a company is undertaking (or planning to undertake) are in fact eligible R&D activities.
2. To allow companies to seek approval on planned or incurred international R&D related expenditure.
Should you have any questions regarding the program, or think your business might be eligible for the Incentive, please contact Nicholas Falzon in our Sydney office.