As a reminder, if your income year ended 30 June 2021, the deadline to submit your Research and Development Tax Incentive (R&DTI) application for the 2020/21 income year is Tuesday, 3 May 2022. Note that this has been extended from the usual deadline of 30 April for all States and Territories.
What is the R&DTI?
R&DTI offers a tax offset for those companies conducting eligible R&D activities. It is designed to encourage companies to grow and innovate, benefiting the Australian economy. You should consider applying if:
- You are incorporated under Australian or foreign law (i.e. a company).
- Conduct or plan to conduct one or more eligible core research and development activities.
- Have eligible R&D expenditure greater than $20,000 (if your expenditure is less than $20,000 you can still claim the tax offset by using a registered Research Service Provider (RSP) to conduct your R&D).
What is the tax incentive?
For companies with an aggregated turnover of less than $20 million, you may receive a refundable R&D offset rate equal to the corporate tax rate plus an 18.5% premium. For companies with an aggregated turnover of $20 million or more, you may receive a non-refundable R&D tax offset rate equal to the company tax rate plus an incremental premium. Non-refundable tax offset essentially means that any unused tax offset cannot be refunded.
What are eligible activities?
The types of eligible activities are set out in the Income Tax Assessment Act 1997, Section 355.25. They must be classified as either core R&D activities or supporting R&D activities. Core R&D activities are experimental activities:
- 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 work that:
- Is based on principles of established science; and
- Proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions.
- That are conducted for the purposes of generating new knowledge (including about creating new knowledge or improved materials, products, devices, processes or services).
Supporting activities are ones that are directly related to core R&D activities or, for certain activities, have been undertaken for the dominant purpose of supporting core R&D activities. Further information regarding these activities can be found on Department of Industry, Innovation and Science website.
How to apply?
Applications can only be submitted through the R&DTI customer portal. To access the portal, applicants must have a myGovID account and link this to the company’s ABN using the ATO’s Relationship Authorisation Manager (RAM). It is important that this process is commenced early to ensure you meet the submission deadline.
If you do require assistance with your R&DTI claim, please contact your Hall Chadwick QLD advisor as we engage experts to provide advice and process applications on behalf of Clients.