R&D Tax Concession

NB The RD Tax Concession remains applicable for the 2009/2010 financial year and is being replaced by the R&D Tax Offset for the 2010/2011 financial year.

What is it?

The Federal Government R&D Tax Concession is an incentive program to encourage private-sector investment in research and development activities. For eligible activities, an accelerated tax deduction at the rate of 125% is available on R&D expenditure. This includes expenditure on items such as salaries, overheads, subcontracts, plant usage, feedstock and others. For companies that have been claiming the R&D Tax Concession for more than three years, a 175% Premium Tax Concession is available on incremental R&D expenditure. This means that increased investment in R&D activities can deliver significant additional benefits.

For small eligible companies, there is the option of cashing in the amount of eligible expenditure plus the additional tax deduction and offsetting it against available tax losses.

For information on other state-specific benefits, please contact us.

Are you eligible?

If your company is developing new or improved products that are leading the market, the R&D Tax Concession may be for you.

Some of the main eligibility requirements of the R&D Tax Concession are:

  • that you must be developing new products or processes
  • that you must have effective ownership of the underlying IP
  • that you have planned the research in advance
  • that innovation or high levels of technical risk (uncertainty) are involved within the project
  • that you are undertaking systematic, investigative and experimental activities to eliminate the uncertainty within the project.

To be eligible for the offset, a company must comply with the following:

  • Grouped Turnover must be less than $5,000,000.
  • Grouped Eligible R&D expenditure must be less than $2,000,000
  • Current or prior tax losses must be available to be cashed in.

 

Advantages

Concession assists in subsidising R&D efforts.

Disadvantages

Timing is significant – an R&D plan should be in place prior to any core R&D activities are undertaken.

What do you do next?

If you would like to know more about this program and the potential benefits available through sound management and documentation of your R&D activities, contact GSA today on (M) 0418 281 870 or by email at info@grantsspectrum.com.au for an initial consultation at no cost or obligation. We look forward to helping you grow your business by accessing all of the government financial benefits to which your business is entitled.

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