You might have heard something about the Research and Development – or R&D – tax rebate provided to business owners by the ATO. This tax incentive is designed to create jobs within Australia and to drive our domestic economy through investment in R&D activities within the country.
However, you might not know for certain what this tax rebate is all about or if you and your organisation are eligible. With this article, we aim to cut through the conjecture and deliver you the information you need.
What Is the R&D Rebate?
If a company has invested in the research and development of a new product in Australia, they may be eligible to claim the R&D benefit. If the claimant business has an aggregated turnover of below $20mn per annum, the benefit is provided as a refundable tax offset.
For companies with a turnover higher than this level, the tax offset is non-refundable. You will be expected to accurately calculate and report your turnover before the claim can be processed.
Can I Claim it?
Any business which is a registered R&D entity can claim the R&D rebate. These entities will usually be incorporated within Australia. However, they may be incorporated overseas but run by an Australian resident who pays income tax in this country, or by a resident of a country covered under one of Australia’s double tax agreements with permanent establishment.
If your organisation is working within a research and development partnership with another company, the partners may be able to make individual R&D rebate claims. If this applies to you, it is important to register your activities with AusIndustry before the claim is submitted.
Individuals, trusts and income tax exempt organisations are not permitted to claim this tax incentive.
What Should I Do to Claim?
To begin with, it is important to keep detailed records of all of your research and development activities within Australia. This will make it much easier for the ATO to process you claim. Next, the claimant must check their eligibility against the above criteria, calculate their annual turnover, prepare their AusIndustry registration number, and complete the required paperwork.
The claim can then be submitted – along with the paperwork and registration details mentioned above – to the ATO when you submit your annual company tax return. The tax office will then process your claim application and inform you of the result.
A great opportunity to seek advice from your trusted adviser.