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We are professional consultants on AusIndustry Research and Development Offsets.
What is the Research & Development Tax Offset?
Unlocking the potential of innovation is a cornerstone of business success in today's competitive landscape. The Australian Government champions this ethos by actively encouraging businesses to invest in Research and Development (R&D) initiatives, empowering them to gain a strategic edge in both domestic and global markets.
R&D endeavours involve the pursuit of new knowledge, fostering creativity and ingenuity within companies. Beyond the intrinsic value of innovation, engaging in R&D often leads to the creation of new employment opportunities, contributing positively to the economy.
To further incentivise R&D activities, the Government offers the Research and Development Tax Incentive (RDTI), providing eligible companies with enhanced tax rebates on qualifying R&D expenditures. This incentive can be particularly beneficial for businesses navigating the cash constraints typically associated with early development cycles.
Despite the tangible benefits of the RDTI, many businesses may not fully capitalize on this opportunity. This may stem from a lack of awareness regarding the program’s availability, unfamiliarity with eligibility criteria, or resource constraints hindering the preparation of a successful submission.
We specialise in helping businesses unlock the full potential of the R&D Tax Incentive. Our experienced team can guide you through the application process, ensuring you maximize your entitlements and capitalise on this invaluable incentive.
Our Mission
Our goal is to build a long term relationship with you. Investing time and care into your grant process, Granted R&D can enable you to focus on the reality of your business growth.
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Answers to your questions
Who is eligible for the Research & Development Tax Incentive?
In order to register for the RDTI, you must:
- Be a company registered in Australia (note that trading trusts are not usually eligible);
- Have spent at least $20,000 on eligible R&D expenses; and
- Have engaged in eligible R&D by creating new knowledge
What is eligible R&D?
In order to be eligible to claim, a company must be able to demonstrate that they conducted work where:
- The outcome cannot be known in advance on the basis of current knowledge, information or expertise, but can only be determined by applying a systematic progression of work that proceeds from hypothesis to experiment, observation and evaluation;
- The work was conducted for the purpose of generating new knowledge which could not be sourced elsewhere and which an expert could not have otherwise known.
How much can be claimed?
For income years commencing on or after 1 July 2021, the R&D Tax Incentive provides the following tax offset:
- R&D entities with aggregated turnover of less than $20 million are entitled to a refundable tax offset that is fixed at 18.5 percentage points above the company’s tax rate. If the tax offset exceeds the entity’s tax liability (eg, where the company is in a sufficient loss position), the balance is paid to the entity in cash.
- For R&D entities with aggregated turnover of at least $20 million, the non-refundable tax offset will be set at the company’s tax rate plus 8.5 percentage points for R&D expenditure between 0 and 2% R&D intensity, and 16.5 percentage points for the portion of R&D expenditure above 2% R&D intensity. R&D intensity is the portion of the company’s total expenditure that is identified as being R&D expenditure.
What is involved in registration?
In order to make a claim under this scheme, a company must prepare a registration which is submitted to AusIndustry within 10 months after the commencement of their financial reporting year. For most businesses with a standard accounting period, this means that the window of registration for the prior financial year is 1 July- 30 April.
A registration contains detailed information about your R&D activities set out in accordance with the scientific method (Hypothesis, Experiments, Evaluation, Conclusions), as well as careful financial information about your expenditure. The information presented in this registration is of critical importance and must be carefully compiled.
Once registered with AusIndustry, the relevant information can then be included in the company’s annual tax return, and the benefit is then applied by the ATO.
Are there risks?
Navigating tax benefits such as the Research and Development Tax Incentive (RDTI) requires careful consideration and proactive engagement. Unlike grants that undergo external approval processes, the RDTI operates on a self-assessment basis. As a taxpayer, the responsibility lies with you to ensure your eligibility aligns with the program’s requirements.
It’s essential to understand that, similar to other tax matters, your eligibility for the RDTI can be subject to audits even after the conclusion of the tax year. Non-compliance could result in the Australian Taxation Office (ATO) demanding repayment of benefits received and imposing substantial penalties.
Approaching registration for the RDTI demands thoughtful consideration, with a meticulous review of eligibility criteria. Our expertise can assist you in navigating this process.
Equally vital is the maintenance of detailed and ongoing records of your R&D activities and associated expenditures. Comprehensive record-keeping serves as the cornerstone of compliant R&D practices, assisting to mitigate risks associated with claims. We can assist you with guiding your record-keeping practices.
We're here to help
Connect with us today, we’ll evaluate your eligibility and explain how the R&D Tax incentive could work for you. And to help you even further, we accept no fees until your activities are registered with AusIndustry and you are eligible to apply to the ATO for your offset.