If you are preparing to claim the R&D Tax Incentive, note some of the benefits have changed slightly.
The way the R&D Tax Incentive applies will change on 1 July 2021 to focus on ‘more intensive’ R&D activities, particularly in medical and clinical development. The changes attempt to refocus the incentive on activities that go well beyond what companies would normally do to improve.
Companies under $20m
For companies with an aggregated annual turnover less than $20 million, the refundable R&D tax offset is a premium of 18.5 percentage points above the claimant’s company tax rate
Companies over $20m
- For companies with aggregated annual turnover of $20 million or more, a two-tiered premium ties the rates of the non-refundable R&D tax offset to the incremental intensity of the R&D expenditure as a proportion of total expenditure for the year. The new rates will be the claimant’s company tax rate plus:
- 5 percentage points for R&D expenditure up to 2% R&D intensity
- 5 percentage points for R&D expenditure above 2% R&D intensity.
The R&D expenditure threshold – the maximum amount of R&D expenditure eligible for concessional R&D tax offsets – will be increased from $100 million to $150 million per annum.
In addition, where an R&D entity benefits from a government recoupment (such as a grant or reimbursement) for expenditure that is also eligible for the R&D tax offset, a clawback applies to reverse the double benefit that arises. The clawback is in the form of an additional 10% tax on the recoupment.