FAQ

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We assist all types of companies in their R&D applications, from industrial engineering and manufacturing companies, food manufacturers, medical technology, computer software companies to start-ups. If your company is conducting R&D projects or experimenting then we can help you.

The tax offset is calculated as a premium to the corporate tax rate, and is, for companies with an aggregated annual turnover of:

less than $20 million — a refundable tax offset equal to your corporate tax rate plus a premium of 18.5%; or

more than $20 million — a non-refundable offset equal to:

·       for all eligible R&D expenditure up to an R&D Intensity of 2% — your corporate tax rate plus a premium of 8.5%; and

·       for additional eligible R&D expenditure above an R&D Intensity of 2% — your corporate tax rate plus a premium of 16.5%.

The term “project” is not used in the legislation, but it is accepted as the basis upon which R&D activities are undertaken. A project is a unique process, consisting of a set of coordinated and controlled activities with start and finish dates, undertaken to achieve an objective conforming to specific requirements, including the constraints of time, cost and resources.

Activities eligible under the R&D tax incentive are categorised as either experimental “core” activities or activities that are “supporting” the core tests, trials or experiments. Generally, these are activities that are carried out in Australia, however under limited circumstances, overseas activities may be eligible if they are unable to be undertaken in Australia and requires prior registration with Innovation Australia.

Core R&D activities are experimental activities:

1.               Whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of that work.

2.               Based on principles of established science and

3.               Proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions and

4.               Are conducted for the purpose of acquiring new knowledge (including knowledge or information concerning the creation of new or improved materials, products, devices, processes or services).

There are some activities that are specifically excluded from qualifying as core R&D activities and therefore are regarded as supporting R&D activities. Supporting activities are activities directly related to core R&D activities or, in the case of production activities (or any activities excluded from being core R&D activities), undertaken for the dominant purpose of supporting core R&D activities. This imposes a stringent test on activities that an entity is more likely to be undertaking for normal operational reasons.  However, such activities remain eligible where the dominant purpose for conducting them is to support core R&D activities.

R&D activities will also require specific record keeping. R&D Business Services is able to assist you with ensuring that your company is maintaining the correct project records

Both AusIndustry (Innovation Australia) and the ATO can audit eligibility after registration. R&D Business Services is able to assist in any R&D audit/customer service activities. We are experienced with helping our clients get through government reviews.

The minimum expenditure threshold for the R&D tax incentive is $20,000. Generally, only R&D activities conducted in Australia qualify for the incentive.

Innovation Australia, assisted by AusIndustry, can approve an R&D activity to be conducted overseas, but only where:

1.           There are physical limitations on an R&D activity being conducted in Australia;

2.           The activity to be conducted overseas has a significant scientific link to core R&D activities conducted in Australia; and

3.           The expenditure on the activity to be conducted overseas is less than that incurred on R&D activities conducted in Australia.

Applications for Overseas Findings must be submitted during the income year in which the company first wishes to claim the expenditure on those activities. An Overseas Finding does not remove the need for registration. A company must also still register the activities at the end of each income year in order to claim a tax offset.

An R&D Entity is one which is a company incorporated:

• Under an Australian law or
• Under a foreign law that is an Australian resident for tax purposes or
• Under a foreign law that is a resident of a foreign country with a double tax agreement with Australia and who carries on business through a permanent establishment of the body corporate in Australia.

Trusts are generally not eligible for tax benefits under the R&D tax incentive. The one exception is a company acting as trustee of a public trading trust.

Innovation Australia (the Board) has legislative responsibility for administration of the R&D tax incentive and for the maintaining the effectiveness of the program. It is responsible for promoting the R&D tax incentive and providing general advice to companies and the government on the operation of the program. It also has the power to disallow certain activities through the issuance of certificates, which are binding upon the Commissioner of Taxation. The Board forms part of the Australian Government’s National Innovation and Science Agenda (NISA). Supporting Innovation Australia are officers of the Department of Innovation, Industry, Science and Research drawn from AusIndustry, the department’s program delivery arm.

AusIndustry is the Australian Government’s principal business program delivery division in the Department of Industry, Innovation and Science. All R&D tax incentive application forms are registered through AusIndustry. The AusIndustry registration team reviews all applications to ensure that the applicant is eligible.

10 months after the end of the financial year. So, companies with income period of 1st July to 30th June, must submit by 30th April the following year. For companies with an income period of 1st January to 31st December must be submit by 31st of October the following year.

To provide us with the necessary time to prepare and submit the appropriate documentation, we ask that all information from your company is received at least two weeks before the final submission date. AusIndustry will not accept applications after the cut-off dates unless there are exceptional circumstances.

 AusIndustry has released new guidelines. Their performance criteria is to have 95% of applications for registration of R&D activities processed within:

40 business days for first time registrants.

20 business days for applications submitted within 6 months of the end of an income period.

80 business days for applications submitted 6 months or more after the end of an income period.

However sometimes processing may take longer and there may be delays. This can occur during peak periods (April-June as well as October-November), if the application is complex, or if the application is selected for a review.

Please click on the “Useful Links” for further information regarding R&D.