DEADLINE: R&D Tax Incentive

The research and development (R&D) tax incentive aims to boost competitiveness and improve productivity across the Australian economy by:

• encouraging industry to conduct R&D that may not otherwise have been conducted
• improving the incentive for smaller firms to undertake R&D
• providing business with more predictable, less complex support.

The research and development (R&D) tax incentive provides targeted tax offsets designed to encourage more companies to engage in R&D. The incentive has 2 core components. For income years commencing on or after 1 July 2021, entities engaged in R&D may be entitled to:

• a refundable tax offset equal to the entity’s company tax rate plus an 18.5% premium for eligible entities with an aggregated turnover of less than $20 million per annum, provided they are not controlled by income tax-exempt entities
• a non-refundable tax offset for all other eligible entities equal to the entity’s company tax rate plus a two-tiered premium determined on the notional R&D expenditure as a proportion of total expenditure for the income year. The new rates will be the company tax rate plus
  • 8.5% for R&D expenditure up to 2% of total expenditure
  • 16.5% for R&D expenditure above 2% of total expenditure.