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R&D Tax Incentive
This program seeks to provide incentives for companies engaging in research and development (R&D) in Australia. It provides eligible companies with a tax offset for expenditure on eligible R&D activities undertaken during the year.
The objectives of the program are to:
- Boost competitiveness and improve productivity across the Australian economy.
- Encourage industry to conduct R&D that may not otherwise have been conducted.
- Provide business with more predictable, less complex support.
- Improve the incentive for smaller firms to engage in R&D.
The two core components are:
- 45% refundable tax offset (equivalent to a 150% deduction) for eligible entities with an aggregated turnover of less than $20 million per annum, provided they are not controlled by income tax exempt entities.
- 40% non-refundable tax offset (equivalent to 133% deduction) for all other eligible entities (entities may be able to carry forward unused offset amounts to future income years).
The rate of the R&D tax offset is reduced to the company tax rate (currently 30%) for that portion of an entity’s notional R&D deductions that exceeds $100 million for an income year. This change applies to assessments for income years starting on or after 1 July 2014 and before 1 July 2024.
In the 2015-16 Budget released on 12 May 2015, the Australian government reiterated its intention to change the rates of assistance under the R&D Tax Incentive to 43.5% for eligible entities with a turnover under $20 million per annum and not controlled by a tax exempt entity and 38.5% for all other eligible entities, to apply from 1 July 2014. The government indicated in March 2015 that it remains committed to re-introducing legislation to change the rates of assistance.
The deadline for lodging an application for registration is ten months after the end of a company''s income year. This means:
- A company with a standard income period of 1 July 2014 to 30 June 2015 must lodge its registration application by 30 April 2016. In 2016, as 30 April falls on a Saturday companies are able to lodge on Monday 2 May 2016.
- A company with a non-standard income period of 1 January 2015 to 31 December 2015, must lodge its registration application by 31 October 2016.
Applications for Overseas Findings must be submitted during the income year in which the company first wishes to claim the expenditure on those activities. For companies that balance on a standard income year this will be before 30 June.
Who Can Apply
Eligible applicants include R&D entities that are incorporated under:
- Australian law
- Foreign law but an Australian resident for income purposes
- Foreign law:
a) A resident of a country with which Australia has a double tax agreement, including a definition of permanent establishment and carrying on business in Australia through a permanent establishment as defined in the double tax agreement.
b) Carrying on business in Australia through a permanent establishment as defined in the double tax agreement.
Trusts are not generally eligible R&D entities. The exception is a body corporate in the capacity of trustee for a public trading trust.
If the company is part of a consolidated group, only the head company should apply for registration for the R&D Tax Incentive.
Please review the Guidelines for the list of ineligible applicants.
Eligible activities include:
- Core R&D: Experiments involving tests being undertaken to investigate a proposition about something unknown, or the effectiveness of something previously untried. They may take place in a range of settings, from a separate laboratory to a normal production run.
- Supporting R&D: Company activities that support core R&D activities.
As a self-assessment program, applicants are advised to review the
Guide to Interpretation
Online Eligibility Tool
to determine eligible activities. New applicants may wish to review the
Please review the Guidelines for complete information on eligible and ineligible activities.
Use these documents as a guide only - always get the latest direct from the
1 May 2015
1 July 2015
30 June 2016
Please see Overview for closing details.
Total Funding Pool
General - Non-Industry Specific
Environment and Sustainability
Innovation and R&D
Department of Industry, Innovation and Science (DIIS)
Small Business Grants
How grants work
Information Technology Grants