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)
