For innovative Australian companies, the Research and Development (R&D) Tax Incentive provides an invaluable opportunity to get back some of the money you invest in pushing boundaries. But the annual registration deadline of 30 April often catches businesses off guard. Don’t let that happen to your company for the 2023 financial year – register your R&D activities now before it’s too late.
What Exactly is the R&D Tax Incentive?
The R&D Tax Incentive is an Australian Government program that encourages companies to engage in experimental activities that generate new knowledge. If you’re developing new or improved products, processes, services, devices or materials, you likely qualify.
The R&D Tax Incentive benefit depends on your company’s annual turnover:
- For entities with an aggregated turnover of less than $20 million the benefit is a refundable R&D tax offset equal to your corporate tax rate plus an 18.5% premium
- For larger entities, the benefit is a non-refundable R&D tax offset. The offset rate equals your corporate tax rate plus:
- 8.5% for R&D expenditure up to 2% R&D intensity
- 16.5% for R&D expenditure above 2% R&D intensity
That equates to thousands or even millions of dollars back in your pocket depending on your R&D expenditures. The money and tax savings can then be reinvested to drive additional innovations.
FY2023 Claims Must Register Activities by 30 April
To claim the R&D Tax Incentive, your first step is to register your activities with AusIndustry. The deadline to register activities is within 10 months after the end of your company’s income year.
For instance, to make a claim for R&D conducted during the standard 2023 financial year (1 July 2022 – 30 June 2023), you must complete the registration process by 30 April 2024. If you’re on a calendar year end, the deadline is the end of October.
The registration process involves submitting key details about your R&D activities to demonstrate to AusIndustry that they meet all aspects of the eligibility criteria. It takes time to prepare a quality submission so be sure to start now to allow time to correctly qualify your activities and prepare the application.
Once the application has been submitted, AusIndustry will process the application and provide your unique registration number, which is needed before you can claim the R&D tax offset in your company tax return.
The Wide Range of Activities Eligible for the R&D Tax Incentive
One of the best aspects of the R&D Tax Incentive is that it is a broad based program. Companies across all sectors may be eligible so long as they self-assess that they have undertaken eligible core or supporting R&D activities.
The definitions of eligible activities are enshrined in legislation, however, broadly, core R&D activities are experimental activities that are based on principles of established science and proceed from hypothesis to experiment, observation and evaluation, and lead to logical conclusions. A supporting activity is one that is directly related to core R&D activities or, for certain activities, has been undertaken for the dominant purpose of supporting core R&D activities.
Projects that are likely to include eligible core and supporting R&D activities include:
- Developing new or improved software. This can be software that forms part of a product or device or platform that enables a service (for example a new 3D visualisation tool) or it can be software that controls a process or operates a product itself
- Formulating new or improved agrichemicals to create more eco friendly/sustainable products, lower input, enhanced crop yield, reduced costs, greater pesticide control etc.
- Developing new or improved manufacturing processes that improve efficiency, safety, quality and/or throughput.
- Engineering new or improved machine tools, devices, electronics and advanced materials etc.
If you’re unsure whether your R&D activities meet the requirements, consult one of our experts. You can also read through our Case Studies page for examples of eligible activities conducted in the software, agrifood, recycling and clean energy, manufacturing, biotech and construction sectors.
Partner with an R&D Specialist to Maximise Your Return
Compiling an accurate and compelling R&D Tax Incentive registration application is complex. To ensure you get the full financial benefit you deserve, leverage help from specialists like NOAH Connect.
Our team can thoroughly review and qualify your R&D activities, identify eligible costs, and handle the entire registration process on your behalf. Our consultants will work closely with you to understand your innovations and maximise your entitlement. Reach out to us today for any questions you may have about your eligibility.