What is the Research and Development Tax Incentive (R&D)

It is the Australian Government's principal measure to encourage industry investment in research and development. It is a market driven program that aims to deliver economy wide benefits to Australia by boosting company competitiveness and improved productivity. It is not industry specific.
The R & D Tax Concession is jointly administered by Ausindustry and the Australian Taxation Office.

To be Eligible you must be one of the following:

• a company incorporated under Australian law ( not a sole trader, partnership or most trusts ); or
• a compnany which although incorporated under foreign law is an Australian resident for tax purposes; or
• a company is incorporated under foreign law, that is a resident of a foreign country with a double tax agreement with Australia that carries on a business in Australia through the permanent establishment of the body corporate in Australia.

What does the R & D Tax Incentive Offer My Business?

Eligible companies with a turnover of less than $20 million receive a refundable tax offset, allowing the benefit to be paid as a cash refund if they are in a tax loss position. All other eligible companies receive a non-refundable tax offset to help reduce the tax they pay.
Companies with a group turnover under $20 million receive a 43.5% refundable tax offset on eligible expenditure.
Companies that have a group turnover greater than $20 million receive non-refundable tax offset

Eligible Activities
For the purpose of the R & D Tax Incentive activities must fit into either the 'core' or 'supporting' R & D categories.

Core R & D Activities are Experimental by Nature

The outcome of these activities cannot be known or determined prior to the activity based on current knowledge, available information or experience. These activities should proceed from the stage of hypothesis, through experimentation, observation and evaluation lead to a logical conclusion.
The purpose of these activities is the generation of new knowledge. The new knowledge produced can be in the form of improved materials, products, devices, processes or services.

Supporting R & D Activities

These are activities that are directly related to core R & D activities in a supportive role. These activities while not a central part of the experiment or activity are necessary for it to occur. Ausindustry has created a list of activities which fall into this category and are excluded from being included as a core R & D activity.
For further information contact us or visit www.business.gov.au.