Incentives replace concessions for R&D

AusIndustry has released guidelines to help businesses understand the registration requirements for the R&D Tax Incentive, including advice on how to complete applications.


The R&D Tax Incentive replaces the R&D Tax Concession for all income years beginning on or after July 1, 2011. Registration for the R&D Tax Incentive will open on July 1, 2012.


According to Senator Kate Lundy, Minister Assisting for Industry and Innovation, the new R&D Tax Incentive is “the biggest reform to business innovation support in more than a decade”.


Describing it as a “transformational” change to the way government supports innovation, Lundy said in a statement that AusIndustry has been working closely with the Australian Taxation Office.


“It is the latest step in what has been an extensive consultation with Australia’s business community,” Lundy said.


“More than 3000 people have attended public information sessions on the incentive, and AusIndustry has distributed material to more than 11,000 businesses and consultants.”


The AusIndustry guidelines state that for SMEs with annual turnover of less than $20 million, the rate of support above the normal tax deduction has doubled from 7.5 cents in the dollar to 15 cents in the dollar – a total tax offset of 45 cents in the dollar.


AusIndustry – the Australian Government department responsible for business program delivery – estimates more than 8,000 businesses will access the R&D Tax Incentive.


Companies wishing to access the incentive must firstly register R&D activities with AusIndustry. Registration takes place after activities have been undertaken.


Applications are due annually within 10 months after the end of the company’s income year in which the activities were conducted.


The AusIndustry guidelines warn that registration of activities does not, by itself, indicate that the activities are eligible or that they comply with other provisions of the relevant legislation.


Registration applications are reviewed by AusIndustry upon receipt, including checking receipt of the application is within the statutory deadlines and the completeness of the information provided in the application.


The guidelines emphasise it is important that companies provide relevant and accurate information in their registration application.


In the majority of cases, AusIndustry accepts the accuracy of the information provided in the application form and registers the activities.


Only an “R&D entity” can apply to register R&D activities. AusIndustry defines an R&D entity as a corporate body that is:

  • Incorporated under an Australian law or
  • Incorporated under a foreign law but an Australian resident for income tax purposes or
  • Incorporated under a foreign law and
  • A resident of a country with which Australia has a double tax agreement, including a definition of “permanent establishment” and
  • Carrying on business in Australia through a permanent establishment as defined in the double tax agreement.


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