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<Wis Reminder> FY23 applications to close on 30 April 2024 and ATO Released FY22’s R&D Incentive statistics.

R&D Tax Incentives
 

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Act Now: Only 2 Months Left!


The deadline for submitting applications for the Research and Development (R&D) tax incentive program is fast approaching. If your company operates within the standard income year (July 1st to June 30th), the statutory deadline for applying for R&D tax incentives is within 10 months after the end of the income period. Typically, this means applications must be submitted by April 30th.


Ensure you allocate sufficient time to complete your application before 30 April 2024!

 

Australia's government, through the Australian Taxation Office (ATO) and the Industry Bureau, implements the Research and Development Tax Incentive program to support businesses in participating in the innovation economy. This initiative encourages innovative activities by reducing research and development costs and enhancing competitiveness through R&D tax incentives.


According to confident data released by the ATO, as of the 21-22 financial year, there were a total of 12,762 registrations representing 14,760 R&D performing entities participating in this program. Among them, 11,198 were small and medium-sized enterprises, accounting for 88% of the total project participants. Of these, 2,607 companies (20.4%) were new user registrations for the program, indicating a growing attraction to the R&D tax incentive program. With R&D total expenditure reaching $15 billion, it injects significant momentum into Australia's innovation economy.


The specific implementation details of the R&D tax incentives vary depending on the size of the enterprise.


  • For small and startup enterprises, i.e., those with annual total turnover below $20 million, the rate remains at 43.5%. This figure includes a 25% company tax rate plus an additional 18.5%.

  • For large enterprises, i.e., those with total turnover exceeding $20 million, the non-refundable rate varies based on the proportion of R&D expenditure to total expenditure. 

  • If R&D expenditure accounts for less than 2% of total expenditure, an 8.5% tax credit is available.

  • Once R&D expenditure exceeds 2% of total expenditure, the tax credit increases to 16.5%.

 

Temporary Full Expensing and Asset Claims

In addition to these standard tax incentive policies, the Temporary Full Expensing and Asset Claims policy also provides additional opportunities for businesses. This policy ended on 30 June 2023. Assets purchased before this date may qualify for research subsidies based on their usage for research activities during the financial year. For instance, if an asset is purchased on June 28th and is solely used for research purposes, the business may be eligible for up to a 43.5% cash rebate.


 

If you have any questions or need further guidance regarding the R&D tax incentive program or taxation matters, do not hesitate to contact our tax professionals. They will provide you with comprehensive answers and personalized advice to help you maximize the benefits of these policies. Additionally, we recommend staying informed and monitoring any potential new changes or policy updates to ensure your business can adapt and benefit from the latest tax incentive measures.


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