Research & Development Tax Incentives in Australia for international entities

Research & Development Tax Incentives in Australia for international entities 2018-06-01T11:12:13+10:00

If your company is carrying out structured research and development activities you may be able to take advantage of this non-dilutive funding and significantly reduce the cost of your investment.

We have deep expertise and know-how in guiding international companies through the end-to-end process of setting up and applying for an incentive for activities supporting medical, scientific, engineering or consumer device or product R&D in Australia.

Attached below is a sample of case studies outlining some of the companies who have taken advantage of R&D Tax Incentives when setting-up in Australia.

In this case study document you’ll also discover:

  • an indication of the end-to-end service we offer
  • real examples of US and Europe-based client companies and the tax credits received
  • details of our track record of success and skills base
Click To Access Case Studies

Research & Development (R&D) Tax Incentives For International Entities In Australia

Here’s what you can take advantage of when you set-up your R&D in Australia

  • The Australian Federal Government’s R&D Tax Incentive program has now made Australia one of the most attractive locations in the world for companies to undertake their R&D activities. Over AUD$1.8 billion in benefits available annually, and to date is the most far reaching and accessible program to support and encourage companies to undertake R&D activities in Australia.
  • The R&D Tax Incentive can provide eligible applicants with a cash refund of up to 43.5% of the amount spent annually on eligible R&D activities.
  • Foreign companies and foreign owned Australian companies can now access the program and claim cash for amounts spent on R&D in both Australia and overseas.
  • Background and project intellectual property (IP) can now also be owned by the foreign holding company(1).

Benefits Available

The principle benefit under the program comes  in the form of a tax offset which is either 43.5%  refundable (payable in cash) or 38.5% non-refundable (carried forward against 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 and therefore attracts company tax. The after tax benefit therefore depends on the grouped turnover and tax position of the eligible entity as shown below:

Eligibility

In order to claim you need to be an eligible R&D entity and conduct eligible R&D activities on your own behalf. An eligible R&D entity includes:

  • An Australian company, or
  • A foreign company that is an Australian resident for tax purposes, or
  • A foreign company that is carrying on business in Australia through a permanent establishment and resides in a country that has a double tax agreement with Australia.

Eligible R&D activities are defined as either core or supporting R&D activities:

  • Core activities are defined as experimental activities:
    • Whose outcome cannot be determined in advance based on current knowledge, and
    • Can only be determined by applying a systematic progression of work that is based on principles of established science, and
    • Are conducted for the purpose of generating new knowledge in the form of improved materials, products, devices, processes
    • or services
  • Supporting activities need to be directly related to the conduct of core activities.

Eligible R&D activities need to be conducted in Australia. However, expenditure in relation to some overseas activities can be claimed where advance approval is obtained through an ‘overseas finding’ process.

The ‘own behalf’ rules imply that the R&D entity needs to own, control and bear the financial risk associated with the project IP. However, a change under the new program now allows the IP generated from the project to be owned by a foreign related entity.

How we can help

Prime can deliver the following services:

  • Undertaking an eligibility assessment on your current or planned R&D activities.
  • Advice on structuring inter-company arrangements to maximise benefits under the R&D Tax Incentive program, whilst managing legal and tax issues on successfully commercialising the technology.
  • Setting up the required Australian companies and providing all necessary compliance and ongoing accounting and taxation support.
  • Advice on required documentation to be maintained in order to lodge a successful claim and support any audit activity that may arise.
  • Preparation and lodgement of the annual claim.

“Prime assisted us with our R&D claim under the new tax Incentive rules, provided advice on setting up and continue to assist with our ongoing accounting and compliance requirements. They understand our industry and were immediately able to make suggestions and point out issues specific to our circumstances. They made the whole process easy, efficient, and helped us get great results beyond our expectations.”

Nolan Sigal
MD, PhD
Tunitas Therapeutics
San Francisco

Click here to Access “Conducting Research in Australia – How to claim the R&D Tax Incentive”
Click here to Access “Conducting Business in Australia for Foreign Entities – FAQs”

About Prime Financial Group

Prime is an accounting and business advisory firm that has been providing specialist R&D tax services for more than 15 years. During this time, we have assisted many SMEs across a broad range of industries obtain in excess of $200 million in R&D cash refunds.

Keeping across the various regulatory changes and evolution of the rules over this time, has enabled us to proactively inform and advise our clients and contacts of new opportunities that arise, including the changes to foreign ownership rules.

We work with start-up, growth businesses and venture capital backed enterprises both in Australia and overseas to help them maximise their claim opportunities and get the much needed cash to support their commercial endeavours. This includes obtaining overseas findings, providing advice on establishing Australian companies  and managing the ongoing accounting and compliance support.

The Next Step

Find out if you’re eligible to claim the R&D Tax Incentive. For advice about your current or proposed R&D activities in Australia or to establish a company in Australia, contact us to arrange a free initial discussion by phone, webinar or Skype.

Our R&D Tax Incentive experts are Brendan Brown and Simone Quin.

Contact Us »

PRIME ACCOUNTING & BUSINESS ADVISORY

Level 19 HWT Tower
40 City Road
Southbank, VIC 3006
T: +61 3 9869 5900

BRENDAN BROWN, PARTNER

brendanb@primefinancial.com.au

SIMONE QUIN, PARTNER

simoneq@primefinancial.com.au

  1. International transfer pricing rules may reduce the amount of the 43.5% benefit where project IP is not owned by the Australian subsidiary company.

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