The Research and Development ('R&D') tax incentive provides a tax benefit to companies to help offset some of the cost of conducting eligible research and development activities.
The R&D tax incentive aims to boost competitiveness and improve productivity across the Australian economy by encouraging industry to conduct R&D that may not otherwise have been conducted, improving the incentive for smaller firms to undertake R&D and providing business with more predictable, less complex support.
Having experience in helping our clients use the program, Abbotts can explain and assist you to access the R&D tax incentive programs that your business may be eligible to receive from the Department of Industry, Innovation and Science or through the ATO.
Eligibility & Registration
There are specific eligibility requirements that an entity needs to satisfy to receive a benefit from the program. In broad terms, entities can apply for the incentive if they are undertaking at least one core R&D activity, and as a direct result of that activity incurs a minimum expenditure of $20,000.
Abbotts can also assist by providing advice on registering your eligible entity to the program.
The video below from the Business.gov.au website provides explanation of what defines scientific research.
Record Keeping Requirements
Ensuring you comply with the record keeping requirements is a key step of maintaining your R&D tax incentive eligibility.
Abbotts can assist you with keeping the correct documentation to satisfy your registration, including advising on what documentation is applicable to the R&D activity you undertake.
Transition from the R&D Tax Concession
The Research and development (R&D) tax incentive replaced the R&D tax concession from 1 July 2011. It provides targeted R&D tax offsets designed to encourage more companies to engage in R&D.
In early 2018 there was an announcement of changes to the R&D tax incentive, as part of the Federal Budget 2018-19. The changes were in response to findings of the 2016 Review of the R&D tax incentive - the Review found that the cost of the incentive has grown significantly and questioned how well it was meeting its objectives.
The Government is reforming the R&D tax incentive to reward additional investment in R&D while also ensuring the integrity and affordability of the R&D tax incentive.
The changes will affect companies accessing the R&D tax incentive with income years commencing on or after 1 July 2018. A Bill to enact legislative changes of the tax incentive has been introduced to parliament, with the Senate referring the provisions of the Bill to the Economics Legislation Committee for inquiry.
Partner, Abbotts Chartered Accountants
Chris has been a part of the Abbotts Team since 1987 and has worked in the accounting profession since 1983. He qualified as a Chartered Accountant in 1991 and was appointed as a Partner in Abbotts Chartered Accountants that year.
Contact Abbotts today to learn about the incentives you can receive for undertaking R&D work
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