Research and Development Tax Incentives

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If you are currently spending money on innovation or undertaking research for your startup or SME, you could be eligible for a tax offsets for core R&D or supporting activities. The Government announced amendments to the R&D tax incentive in its 2020-21 Federal Budget (access our Budget summary here) - see below for all the important deets!

What is the incentive?

For small companies (those with revenue of less than $20m) the refundable R&D tax offset is being INCREASED to 18.5% above your applicable company tax rate and there will be NO cap on cash refunds. These measures will apply from 1 July 2021. 

What activities are eligible?

This incentive program supports experiential R&D activities (also known as core activities) that are conducted for the purpose of generating new knowledge (think developing new software or UX, for example)..

What can you claim on offset?

Subject to eligibility criteria, businesses can generally claim a tax offset for: 

• Expenditure incurred on R&D activities; 

• Decline in value of depreciating assets used in R&D activities; and

• Balancing adjustments for depreciating assets used for R&D activities.

Who is eligible and when to apply?

The R&D tax incentive is available to all Australian companies if they meet the eligibility criteria.

Timing:

The changes are set to apply to income years commencing on or after 1 July 2021. Keep an eye on this directory for ongoing updates on how to apply for this claim.