Changes to the R&D Tax Incentive Program

Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 was introduced to Parliament on 5 December 2019 proposing the following changes to the R&D Tax Incentive Program:

  • increasing the R&D expenditure threshold from $100 million to $150 million;
  • linking the R&D tax offset for refundable R&D tax offset claimants to claimants’ corporate tax rates plus a 13.5 percentage point premium;
  • capping the refundability of the R&D tax offset at $4 million per annum (however, offset amounts that relate to expenditure on clinical trials do not count towards the cap); and
  • large R&D entities with aggregated turnover of $20 million or more for an income year are entitled to an R&D tax offset equal to their corporate tax rate plus one or more marginal intensity premiums, as summarised below:

Tier 1

  • R&D intensity range: Notional deductions representing up to and including 4 per cent of total expenses
  • Intensity premium: 4.5 percentage points

Tier 2

  • R&D intensity range: Notional deductions representing greater than 4 per cent and up to and including 9 per cent of total expenses
  • Intensity premium: 8.5 percentage points

Tier 3

  • R&D intensity range: Notional deductions representing greater than 9 per cent of total expenses
  • Intensity premium: 12.5 percentage points

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