Offset your R&D costs to help innovate and grow your business
Overview of the R&D Tax Incentive
As well as providing financial support, the R&DTI can be an opportunity to collaborate with registered Research Service Providers (RSPs).
What do you get?
Tax-offset for eligible R&D activities.
Who is this for?
Eligible companies conducting eligible R&D activities.
New tax offset benefits for eligible R&D conducted from 1 July 2021
The tax offset for eligible R&D conducted from 1 July 2021 is now based on a premium on top of your corporate tax rate.
Turnover of less than $20 million
For R&D entities with aggregated turnover of less than $20 million, the refundable R&D tax offset is your corporate tax rate plus an 18.5% premium.
Turnover of $20 million or more
For R&D entities with aggregated turnover of $20 million or more, the non-refundable R&D tax offset is your corporate tax rate plus an incremental premium.
The premium increments are based on your R&D Intensity. This is a percentage of your eligible R&D expenditure as proportion of your total expenditure for the year.
- All eligible R&D expenditure up to 2% R&D Intensity will receive a non-refundable R&D tax offset equal to your corporate tax rate plus 8.5% premium.
- Additional eligible R&D expenditure above 2% R&D Intensity will receive a non-refundable R&D tax offset of your corporate tax rate plus 16.5% premium.
Tax offset benefits for eligible R&D conducted up to 30 June 2021
If you are claiming eligible R&D conducted up to 30 June 2021, the previous tax offset rates apply.
Depending on your company's annual turnover, the R&DTI provides either a refundable or non-refundable tax offset.
- 43.5% refundable tax offset is available to companies with an annual turnover of less than $20 million.
- 38.5% non-refundable tax offset is available to companies with an annual turnover is more than $20 million.
Understanding eligible R&D Activities
The difference between a R&D project and a R&D activity
R&D projects are made up of a number of steps that you must take for a project to succeed. These steps are R&D activities. Each R&D activity will have of one or more actions that you must complete to achieve an activity outcome.
The program supports R&D activities that can be shown to follow a set of specific actions. These actions must meet the requirements set out in the definition of an eligible R&D activity.
The definition of an eligible R&D activity under the R&DTI
Eligible R&D activities are defined in the legislation that underpins the program. The Income Tax Assessment Act 1997 identifies eligible activities as either core R&D activities or supporting R&D activities.
How does it work
The R&DTI is a self-assessment program
Before you register for the R&DTI:
- You must self-assess whether your entity is eligible.
- You must self-assess if your R&D activities are eligible.
- You must self-assess that your R&D expenditure is eligible.
- You must keep records and evidence to support your registration and claim.
To help ensure your eligibility you should read the legislation. You should also review supporting information available here including the Guide to Interpretation.
Joint administration
The R&DTI is jointly administered by:
- AusIndustry on behalf of Industry, Innovation and Science Australia
- the Australian Taxation Office (ATO).
You need to register your R&D activities with AusIndustry then claim your tax offset through your annual tax return with the ATO.
Steps you need to follow
Applying for the R&DTI is an annual process. Each year, you should review the following steps as part of your application process. These steps help to ensure you and your R&D activities are eligible.
Self-assess
You should first self-assess if you're an eligible R&D entity under the program.
You need to then review your planned R&D and self-assess each activity for eligibility under the definition.
You may consider reviewing the help available within our self-assessment section and also the R&DTI Guide to Interpretation.
Remember to keep records of your self-assessment.
Consider using a registered Research Service Provider
Collaborating with a registered Research Service Provider can offer you access to additional infrastructure or expertise. It can also enable you claim the offset if your eligible expenditure is less than $20,000.
Overseas Finding
If you plan to claim R&D activities conducted overseas, you must ensure they're eligible by receiving a mandatory Overseas Finding.
Advance Finding
If you want assurance that your activities are eligible before registration, you can apply for an Advance Finding. This is not mandatory.
After applying for an Overseas or Advance Finding you will still need to register your R&D activities through the portal.
You should continue to self-assess your eligibility while conducting your R&D and before you apply to register.
Ensure you keep records before, during and after each activity.
If you've assessed you're an eligible entity and are conducting eligible activities, then apply to register for the program. You should do this within 10 months of the end of the income year, during which you completed the R&D activities.
You must apply for registration each year you conduct eligible R&D activities.
Once AusIndustry receives your application, we'll issue your company an R&DTI registration number.
AusIndustry may review the activities in your claim. We may do this at your application stage or after your activities are registered. We would do this to ensure your activities comply with the legislation.
To claim your tax offset you must enter your registration number into the R&D schedule of your company's annual income tax return.
You should then lodge your tax return with the ATO.
Important considerations
While we can support you as you apply, it's your responsibility to ensure your application and claim meet the program requirements.
You may consider consulting an R&D tax adviser or tax agent to prepare your application for registration and later claim. However, this does not guarantee your eligibility.
Learn more
Listen to our podcast series to better understand the R&DTI.
Find out how to self-assess your company and R&D activities.
Learn what happens if your registration is reviewed by AusIndustry.
How to apply
To apply, you'll need to use our customer portal. This requires you to link your myGovID to your company ABN to get access.
You may consider doing this while you review the R&D Tax Incentive guidance here. We have provided information to help you with this process.
Need help?
Let us answer your question via phone, email or live chat. And if we can't help, we'll put you in touch with someone who can.
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