The Research and Development (R&D) tax incentive encourages companies to engage in R&D activities with the purpose of fostering Australia’s innovation and competitiveness.
The incentive is jointly managed by the Australian Taxation Office (ATO) and AusIndustry and has two core components: a refundable tax offset for certain eligible entities with an aggregated turnover of under $20 million and a non-refundable tax offset for all other eligible entities.
In the lead up to World IP Day on April 26, it’s a good time to remind businesses involved in IP management, commercialisation and protection about the availability of the incentive. Businesses involved in IP are often conducting R&D activities that may be eligible to claim under the incentive.
How can your business claim the R&D tax break?
The incentive requires you self-assess your eligibility to register activities and claim R&D tax offsets in any given year. To be eligible to claim the R&D tax incentive, generally your total notional deductions must be greater than $20,000 and it cannot be claimed for any business usual activities or activities or expenditure not related to your research and development activities.
The ATO has developed a checklist that will help you claim the tax offset. It can help you work out whether your R&D activities relating to IP and patents might be eligible for the tax incentive.
Remember to keep accurate records so you can claim the tax incentive. Not only does this make good business sense, but it’s required, and both the ATO and AusIndustry share the information they receive about the incentive. You can also seek advice from a registered tax if you need assistance with applying for the incentive.