New R&D tax incentive changes are likely to boost confidence among businesses to make greater commitments to their innovation activities. The changes include new thresholds and a new way to apply.
There are three key areas of change from 1 July:
- Previously, claimable R&D costs were effectively capped at $100 million. From July 1, the R&D expenditure threshold increases to $150 million.
- For companies with an aggregated turnover of less than $20 million, tax offset rates are now equivalent to the company tax rate plus an 18.5% premium. Before, companies were entitled to a 43.5% refundable R&D tax offset.
- For companies with an aggregated turnover of more than $20 million, they are entitled to a non-refundable R&D tax offset equivalent to their company tax rate plus a premium based on the intensity of their R&D; the intensity being the relationship between R&D expenditure and total expenditure.
The two-tiered premium rate based on R&D intensity:
- 5% for R&D total expenditure for the year up to 2% of R&D intensity.
- 5% for R&D total expenditure for the year greater than 2% of R&D intensity.
A number of other changes have been introduced aimed at:
- improving the transparency of the program by publicly disclosing R&D claims
- greater enforcement activity and improved program guidance to participants
- amendments to technical provisions.
For the year ending 30 June 2021 (FY21) and beyond, all applications will need to be prepared and lodged through AusIndustry’s new Research & Development Tax Incentive (R&DTI) Customer Portal. The applications require greater transparency about the specifics of the R&D activities undertaken.
We’re ready to help. If you believe there is an opportunity to make an R&D application, please contact either Robert Lissauer or John Christopoulos on +61 3 9820 6400.