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)