The 30 April deadline for R&D tax incentive registration lodgements with AusIndustry is approaching fast.
Companies who have undertaken eligible R&D activities during the 2014 financial year have 10 months from the financial year end to register their R&D activities with AusIndustry in order to be eligible for an R&D tax incentive claim. This means that companies who operate on a standard 1 July – 30 June accounting period have until 30 April 2015 to make a claim for their 2014 financial year.
The R&D benefit is a significant one where small to medium companies with a turnover of less than $20M are currently eligible for a 45% tax offset on R&D expenditure, which may be refundable for companies in a tax loss position. Larger companies are eligible for a 40% tax offset.
If you have already lodged your tax return for that period an amendment to the return can be requested to include the R&D tax incentive claim after the registration process has been completed.
What should companies do now?
Companies who have not yet made a claim should review their R&D activities and expenditure for the 2014 year. If the identifiable R&D expenditure exceeds the minimum claim expenditure threshold of $20k in that year then a R&D tax incentive claim should be made.
For companies who have already completed their 2014 claim, now is also a good time to start thinking about the current financial year. As announced in the 2015-16 government budget, the offset rate will be reduced by 1.5 percentage points to 43.5% and 38.5% respectively, for the financial year ending 30 June 2015. This is in line with the announced 1.5 percentage point decrease in company tax rates.
From the 2015-16 financial year onwards, the margin between the R&D tax offset rates and the company tax rates will return to 10% and 15%, respectively.
Accurate and contemporaneous documentation is the key to a robust R&D claim and systems should be in place to identify, retain and manage this documentation. Watermark Advisory Services can assist companies in compiling an accurate and timely application to meet this deadline.