Investing in R&D? Lodge your activity by 30 April

March 2019

Australian businesses have until 30 April to register their research and development activity.

Small business needs to innovate to survive and yet claims by SMEs for R&D represent just 10% of all claims made each year.  In fact, a recent report on Australian businesses R&D that they had the lowest spend in the OECD.

In many cases, small businesses are completing R&D work without recognizing that they are doing so, however, there is a federal government incentive that business owners should be aware of.

What is the R&D Tax Incentive?

The R&D Tax Incentive is the federal government's primary assistance programme for encouraging business R&D and approximately 14,000 Australian companies register annually.

Registrations for R&D activity conducted during the year ending 30 June 2018 must be lodged by 30 April 2019.

Are you eligible?

To be eligible for R&D Tax Incentives you must be:

  • Incurring eligible R&D Expenditure through a company structure;
  • Conducting an experimental activity where the outcome cannot be determined in advance; 
  • Generating new knowledge by developing new or improved;
  • Products; 
  • Processes; or
  • Services;
  • Documenting the results of your R&D activity.

Why should your business register its R&D work?

Companies engaged in R&D may be eligible for the following tax benefits:

  • Companies with group turnover less than $20 million receive a 43.5% refundable tax offset which provides the following for eligible expenditure depending on a company's tax position:
    • a 43.5% cash refund to the extent the company is in tax loss;
    • a 16% tax saving/refund if the company is in a tax payable position;
  • Companies with group turnover exceeding $20 million receive a 38.5% non-refundable tax offset which provides the following for eligible expenditure:
    • an 8.5% tax saving.

Is your registration compliant?

Companies that may be considering registering, or that may have already registered, should also be aware of current compliance requirements including:

  • Documenting of the results of R&D activity and the new technical knowledge to be generated;
  • Ensuring R&D Applications clearly outline the knowledge gap sought to be addressed during R&D activity;
  • Documentation around the nexus of R&D Expenditure and personnel time with registered R&D activity.

What to do next

If you are already undertaking R&D activity in your business, the deadline for registering is 30 April 2019. Your accountant can help you review your registration and that your claim is compliant.

Contact us on 02 9957 4033 for more information or email our team with your enquiry.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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