Changes to R&D tax incentives

The R&D Tax Incentive provides a targeted tax offset designed to encourage more companies to engage in research and development in Australia.

For a company with a ‘standard’ income year beginning on 1 July 2011, the first opportunity to register and claim the R&D tax incentive will be from 1 July 2012.

Companies should consider how the new requirements for registration under the R&D tax incentive will impact upon their accounting, information and record keeping systems from 1 July 2011.

The R&D Tax Incentive has two core components:

•a 45 per cent refundable tax offset (equivalent to a 150 per cent deduction) to eligible entities with an aggregated turnover of less than $20 million per annum
•a non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) to all other eligible entities.

Rules and provisions were introduced with the R&D tax incentive to:

•ensure that, despite the repeal of the R&D tax concession provisions, those provisions can still apply to certain things done (for example, expenditure that has been incurred) before they were repealed
•establish special transitional arrangements to broadly address some situations that extend over income years where the R&D tax concession provisions and the R&D tax incentive provisions apply.

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