Benefits
The principle benefit under the program comes in the form of a tax offset which is either 43.5% refundable (payable in cash or offset against tax liability) or 38.5% non-refundable (against current or future tax liabilities).
To qualify for the refundable tax offset the eligible entity must have annual grouped turnover of less than AUD $20 million.
Note: turnover of grouped entities outside of Australia is also counted in the AUD $20 million test.
The R&D expenditure subject to the tax offset is not deductible for tax purposes. The after tax benefit therefore depends on the grouped turnover and tax position of the eligible entity as shown below:
| Grouped Turnover and not be controlled by one or more exempt entities |
|---|
| Under AUD $20 Million | Over AUD $20 Million |
| Available R&D tax offset Calculated on eligible R&D expenditure | 18.5%
Plus corporate tax rate# | 8.5% for 0-2% of R&D intensity*
16.5% for >2% of R&D intensity*
Plus the corporate tax rate# |
| After tax benefit | 18.5% plus corporate tax rate of annual R&D spend as a refundable offset. Refund is offset against any tax payable with the balance paid in cash | 8.5 – 16% of annual R&D spend received as a reduction in company tax payable with any excess carried forward |
Liability limited by a scheme approved under Professional Standards Legislation. This is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this brochure. All information is subject to change without notice. We and each party providing material displayed disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of information or material in this brochure. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.
* R&D intensity = R&D expenditure/total expenses
#The corporate tax rate is 25% from 1 July 2021 where a company’s aggregated turnover is below AUD $50 million and the entity is a base rate entity. Where the company’s aggregated turnover exceeds AUD $50 million or the company is a non-base rate entity the corporate tax rate is 30%.
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