Research & Development (R&D) Tax Incentives
Are you looking to develop a new process, or create a new innovative product – but not sure how to fund the research?
The Research & Development (R&D) tax incentive program encourages companies to engage in R&D activities which benefit Australia, by providing a tax offset for eligible R&D activities. It has two core components:
- A refundable tax offset for certain eligible entities whose aggregated turnover is less than $20m
- A non-refundable tax offset for all other eligible entities.
It is the largest incentive in Australia for Australian companies creating new/novel products or processes and is jointly administered by the ATO and AusIndustry. The two main points of eligible R&D activities are:
- Something new/novel innovation that has never been done anywhere in the world before (generating new knowledge)
- Can prove that no existing methodology or process for such an innovation exists in the public domain (ie patent searches, journal articles, forums, published theories, etc)
To be eligible you must:
- Be structured as a company (not a sole trader, partnership, trust)
- Be incorporated under Australian law, OR incorporated under a foreign law but an Australian resident for income tax purposes
- Be a for-profit entity
- Doing at least one of the following:
- Researching the development of potential products due to a lack of public knowledge available
- Creating new products or services that are unique to your industry
- Improving or modifying a product, service or process OR changing the way it is produced.
- Developing new knowledge/methods of completing tasks where the outcome is often unknown.
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Can be claimed |
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Can’t be claimed |
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Raw materials |
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Advertising / Marketing |
Audit fees |
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Contractors directly involved in R&D |
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Distribution / Selling costs |
Bad Debts |
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Wages/Salaries (incl super & payroll tax) |
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Preparing tax return costs |
ASIC Costs |
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Office / warehouse rent |
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Patent & trademark costs |
Director’s fees |
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Subscriptions used in R&D |
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Entertainment expenses |
Donations |
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Insurances (ie Workcover) |
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Patent & trademark costs |
Tender costs |
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Depreciation of assets used in R&D |
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To assist with Cashflow, you may be able to access R&D Financing.
A Few Tools We Have Available
- The R&D Tax Incentive Calculator – to estimate how much you could potentially receive from your R&D activities
https://www.prmpt.com.au/rd-calculator/
- The R&D Eligibility Test – to determine if your R&D activities would be eligible
https://www.prmpt.com.au/eligibility-test/
- We’ve created a unique Online R&D Questionnaire Form for our HFB Group clients to tell us more about your R&D project and for us to then analyse and discuss further.
https://zfrmz.com/LyOu10RZ5uBjwcPnrHJF
Interested in knowing more?
We work with registered R&D experts to ensure you get the best possible result. If you would like to know more or would like to have your eligibility assessed, please get in touch!
NB: Applications open on the 1 July and close on 30 April each year, for the previous financial year.
