R&D Tax Incentive: Do I qualify? What can I claim? How does it work?
The R&D tax incentive (RDTI) is a major source of funding for startups and SMEs. It’s an Australian government program, used by more than 10,000 companies each year. All up, it provides more than $1 billion of support for research and development activities annually.
The RDTI is reasonably simple in theory but not so much in practice. You might have seen it in the media over the last few years too, as proposed government changes have proven unpopular with many. Here, we’ll explain how the RDTI works and what you need to know if you’re considering claiming it.
How does the R&D tax incentive work?
Essentially, the RDTI can provide up to 43.5% of your annual R&D costs back through the tax process.
Let’s start with the admin side. The program is run by the Australian Taxation Office (ATO) and AusIndustry. It’s based on self-assessment, which means you need to decide if you’re eligible before applying. For many this means seeking advice from an RDTI service, especially with recent uncertainty around eligibility and some headlines about companies having to pay R&D refunds back.