R&D Tax Incentive
At a glance
Provides a tax offset for some of a company's cost of doing eligible research and development (R&D) activities by reducing a company's income tax liability. Tax offsets of 43.5% or 38.5% are available for costs incurred on eligible activities depending on a company’s annual aggregated turnover. The 43.5% benefit is a refundable offset.
Who can apply:
At a minimum, applicants must:
- be an incorporated company
- be conducting eligible core R&D activities. These are defined in the legislation as being experiments that are guided by hypotheses and conducted for the purpose of generating new knowledge
- have incurred eligible R&D expenditure or notional deductions of at least $20,000 (unless using a Research Service Provider or a Cooperative Research Centre).
This is a self-assessment programme. Further key eligibility requirements apply.
What is the R&D Tax Incentive?
The R&D Tax Incentive provides a tax benefit to companies to help offset some of the cost of conducting eligible research and development activities.
The R&D Tax Incentive is a self-assessment programme. This means that you are responsible for assessing whether your company and the R&D you are conducting meet the eligibility requirements of the programme. These requirements are determined by legislation.
To apply for the R&D Tax Incentive, you will need to register your eligible R&D with the Department of Industry, Innovation and Science (the department).
You are also responsible for keeping all records and documentation to demonstrate your R&D is eligible as defined in the legislation.
The department (on behalf of Innovation and Science Australia) jointly manages the R&D Tax Incentive with the Australian Taxation Office (ATO). The department manages the registration of R&D activities, and the ATO manages the rules on eligible entities and costs.
To be eligible for the R&D Tax Incentive you must:
- be a company that is liable to pay income tax in Australia.
- conduct at least one activity that meets the legislated definition of a core R&D activity.
- Core R&D activities involve at least one hypothesis guided experiment that is undertaken to generate new knowledge.
- Other non-experimental activities that directly support a core R&D activity may be eligible as supporting R&D activities.
You may claim for some R&D conducted overseas under certain circumstances.
Find out more about the eligibility requirements for the R&D Tax Incentive.
The department may conduct checks that registered activities comply with the law after you have registered. Similarly, the ATO may check if the R&D costs being claimed are eligible after registration.
When can I register for the R&D Tax Incentive?
The deadline for lodging an application to register your eligible R&D is 10 months after the end of your company's income year. This means:
- a company with a non-standard income period of 1 January 2016 to 31 December 2016, must lodge its registration application with the department by 31 October 2017.
- a company with a standard income period of 1 July 2016 to 30 June 2017 must lodge its registration application with the department by 30 April 2018.
You must lodge an application for registration for each year in which your company wishes to claim the R&D Tax Incentive. Applications received after the deadline will not usually be accepted.
Apply to register your R&D through the application form.
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