Just a quick reminder that for companies with financial year ends of 30 June 2022, the AusIndustry deadline to apply for the R&D Tax Incentive is 2 May 2023.
As 30 April falls on a Sunday this year, the standard deadline has been pushed back to allow a few extra days for application lodgement with AusIndustry. If you are planning on applying for the R&D Tax Incentive (RDTI), you need to start preparing your application now.
If you are evaluating your eligibility for the RDTI, please reach out to Azure Group for a complimentary discussion of your activities and eligibility. Our team of specialists are happy to assist you through each step of the application process.
What is the R&D Tax Incentive (RDTI)?
The RDTI encourages Australian companies to engage in innovative research and development activities in Australia. Companies that are overcoming technical challenges to create new products, processes, or services are potentially eligible for the tax incentive.
To learn more about the R&D Tax Incentive, CLICK HERE.
Is my business eligible to claim R&D tax offsets?
The R&D Tax Incentive is available to businesses that meet both of the following conditions:
- The business must be an R&D entity.
Eligible R&D entities are either incorporated under an Australian law or incorporated under a foreign law. If incorporated under a foreign law, entities must either be an Australian resident for income tax purposes or be a resident of a country with a double tax agreement and carrying on a business in Australia through a permanent establishment as defined in the appropriate double tax agreement.
- The business must have spent at least $20,000 on eligible R&D activities.
Important note: If you are an R&D entity that has spent less than $20,000 on eligible R&D activities, you may still be entitled to claim tax offsets for expenditures incurred for the services of a Research Service Provider (RSP).
How much can I claim in R&D Tax Offsets?
The rate of your R&D tax offset is tied to your corporate tax rate, which is determined based on the aggregated turnover of your business during a financial year.
- Entities with an aggregated turnover of less than $20 million will be able to claim a refundable tax offset rate of 43.5%. This is calculated using a corporate tax rate of 25% + an offset rate of 18.5%.
- Entities with an aggregated turnover of $20 million or more must apply the non-refundable tax offset rate, which can range from 33.5% to 46.5% depending upon their R&D intensity.
Important note: For entities entitled to a non-refundable tax offset, the offset is used to reduce your tax payable. If your R&D offset exceeds your tax payable in the given year, it can be carried forward to a future income year to reduce future tax liabilities.
How do I apply for the R&D Tax Incentive?
The Australian Taxation Office (ATO) has cracked down on the R&D Tax Incentive in recent years, using high-profile cases to demonstrate their increasingly stringent review process. Now, more than ever, businesses that are planning to apply for the tax incentive should seek the advice of experienced R&D experts to maximise their chance for a successful application.
As champions of the technology and emerging growth sector, Azure Group has a proven track record of securing government grants for our clients, with a particular focus on the R&D Tax Incentive. Year after year, our team of dedicated R&D specialists continues to achieve the highest possible success rate of R&D Tax Incentive applications with expert strategic planning, preparation, and lodgement - in some cases, even overturning unfairly restrictive interpretations of eligible expenses.
If you are evaluating your eligibility for the R&D Tax Incentive, contact us today for a FREE complimentary discussion of your R&D activities, and everything you will need for the application process.
Have you noticed our #FridayExpertTips... here's one that relates to Technology
“Be flexible and listen to the market: Even if you nail down the perfect niche, it won’t necessarily remain the same forever. Markets can be fickle. If you can’t pivot and react when the winds of change come, you’ll be blown away.”