Claim the R&D Tax Incentive for FY21

graphic showing tax office giving money to business

Applications for financial year 2021 close to 3 May 2022, so now is the time to get your head around the R&D Tax incentive.

Aimed at engaging Australian companies in research and development they might not otherwise pursue – the R&D Tax Incentive is just one of the many ways smaller organisations can help boost their productivity, sales and growth. If your business currently spends (or is looking to spend) at least $20,000 on eligible research and development work, this government grant could be right up your alley.

Back to basics: what is the R&D tax incentive?

Put simply, the research and development (R&D) tax incentive is a government initiative that encourages local businesses to explore research and development endeavours that benefit them, as well as Australia. This is done by providing a tax offset for all eligible activities, which then helps encourage local businesses across all sectors pursue technological innovation at a lower cost.

The incentive, which is already utilised by more than 10,000 local businesses, is made up of two main components:

  • a refundable tax offset for eligible entities whose total turnover is less than $20 million per annum, and
  • a non-refundable tax offset for all other eligible entities.

The goal of incentives like this? To boost competition within our local economy, give smaller or early-stage organisations the opportunity to recoup some of their development costs, and to provide government support to businesses with innovative projects or plans on the horizon.

Understanding the fine print

As organisations (like you) are responsible for assessing whether or not your entity is eligible to register and claim R&D tax offsets, it’s definitely worth chatting to professionals (like us) who can help provide clarity. This is particularly important as the incentive regulation relating to eligible technology, as well as claimable expenses, has become more and more stringent in recent years.

Not only will your organisation need to show records of your working processes, you’ll also need to prove your projects sit within the parameters of R&D, as defined by the government. As a simple trick, consider whether your R&D activities have been conducted for the ‘purpose of generating new knowledge’.

To summarise – your ability and eligibility to claim R&D tax offsets will depend on whether you’re actually an R&D entity, and if you are, whether you have incurred estimated deductions of at least $20,000 on eligible R&D activities.

In most instances, these activities will need to have taken place in Australia, although there are some exceptions to this rule, so be sure to double check.

Taking the next step: do you qualify for the R&D tax incentive?

If this all sounds confusing, take our quick R&D Incentive qualification survey to check if your business may be eligible. If so, complete the contact form to arrange a free 30-minute initial consultation. We’ll then provide you with a claim estimate and timeframe to manage the entire process. This includes a detailed assessment of your activities and registering these with the Department of Industry, Innovation and Science to kick off the claim process. During this time, you can expect to have three to four one-hour meetings to work through the application with us.

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