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.