R&D Tax Incentive – rates of support

What is the benefit of claiming the R&D Tax Incentive in Australia?

What is the effective rate of support under the R&D Tax Incentive given the phased reduction in corporate tax rates and the lapsing of the Government’s proposed changes to R&D.

The R&D corporate community have now operated in a state of flux since the Treasurer announced proposed changes to the R&D Tax Incentive in the May 2018 Federal Budget.

 

Without rehashing the detail, since then we have seen public consultations, submissions, proposed legislation (hidden under the most obscure Bill title), a Senate Committee, and ultimately the decision being made to put the proposals on hold.

 

Now that the dust has settled, what is the benefit to companies of claiming R&D?

 

Financial Year 2017/18

Turnover

Company Tax Rate

R&D Tax Incentive

Effective Rate of Support

<$20 million*

27.5%

43.5%

16%

Between $20-25 million

27.5%

38.5%

11%

>$20 million

30%

38.5%

8.5%

 

For financial year 2018/19 and assuming the status quo, with the phased reduction in the corporate tax rate for companies with turnover between $25 and $50 million, the rates of support will be as follows:

 

Financial Year 2018/19

Turnover

Company Tax Rate

R&D Tax Incentive

Effective Rate of Support

<$20 million*

27.5%

43.5%

16%

Between $20-50 million

27.5%

38.5%

11%

>$50 million

30%

38.5%

8.5%

 

*Companies in tax losses with turnover less than $20 million also have the option of “cashing out” their R&D through the refundable tax offset.  The tax offset equates to 43.5% of eligible expenditure incurred

 

All companies have 10 months from the financial year-end to lodge an R&D claim and lodgement and registration is an annual requirement.  Therefore companies with a financial year ended 30 June 2018 have until 30 April 2019 to lodge their R&D claim.

 

If you would like further information please contact us or via phone on 1300 INC ADV (1300 462 238)