R&D Tax Incentive For Dummies
Companies that once thought the Tax Incentive couldn’t possibly apply to them are now realising the potential to claim their dollars spent on research and development.
Some seem to think it sounds too good to be true, receiving money back for developing a new product or service, but with skepticism aside the R&D Tax Incentive is recognised, by the Australian Government, as a conscious effort to grow Australia’s economy and acknowledge our future of innovation.
So, here’s a brief guide on the R&D Tax Incentive for Dummies, from someone just as new to the conversation as you are…
My name is April and I am an Administrative Assistant at Synnch. I dabble in writing now and then and have been working at Synnch for a short period of time, the team thought who better to write an article on the R&D Tax Incentive for dummies, then yours truly!
What is the Research & Development Tax Incentive?
The Research and Development Tax Incentive is a national program in Australia to assist businesses in almost all industries undertaking R&D for their product, service or practically anything that is deemed to be generating new knowledge on a global scale.
You can claim up to 43.5% of eligible R&D expenditure either as a cash refund, or tax offset, depending on your company’s tax position.
The program is available to Australian businesses that are conducting trials and testing, based on a hypothesis following a scientific progression of work, in Australia permitting they are an incorporated Australian company.
If you’ve spent a minimum of $20,000 on R&D, you can make a claim.
Is your company eligible?
One of the things that prevents businesses from looking into the R&D Tax Incentive is they think they’re ineligible to claim.
By answering yes to a few simple questions, this can help determine your eligibility and prompt you to learn more about what you could be missing.
- Are you incorporated as a company under Australian law and registered with ASIC as a proprietary limited entity and not as trustee for a trust?
- Is your innovation new, novel and your outcomes could not be known in advance?
- Does your research conform to the definition of core/supporting activities and is your aim to commercialise your product or service?
- If you are an international entity, are you conducting business in Australia through a fixed place of business or subsidiary company incorporated in Australia and are you a resident of a country with which Australia has a double tax agreement? (this isn’t as hard to satisfy as you might think)
If you answered Yes to any of these questions, you may be eligible to claim!
What’s in it for you?
To put it simply, should you be eligible to claim the R&D Tax Incentive; you may be able to claim a maximum benefit of 43.5% cash back.
This means if, you spend $100,000 AUD on eligible R&D activities in a company that turns over less than $20m AUD you could claim up to $43,500! CASH!
Or, depending on your tax position, receive a tax offset which can be utilised immediately or can be applied to future years.
Why should you do it?
The real question is why shouldn’t you do it?
Australia is constantly striving towards an innovative future, and if you want your company to be a part of that and receive money back for doing so, why wouldn’t you?
Businesses often think there is too much paperwork and people-work involved. Therefore, they don’t have the capacity, time or ability to commit to putting together a claim, but when you have the right systems to track everything for you, the guess work and stress work is no longer a concern.
Need more info?
Head to our resources page to learn all about Synnch, R&D and making the most out of your claim 😉