Companies with a year end of 30 June 2012 have until April 30 2013 to identify and file their R&D activities with AusIndustry. This will be the last chance to claim the R&D Tax Incentive for 2012 research and development activities. The program allows companies to file claims up to ten months after the end of the financial year.

This is the first year in which companies will be able to gain the financial benefits of the new R&D Tax Incentive program which offers:

  • a 45% refundable tax offset on R&D expenditure to companies with an aggregated group turnover of less than $20M;
  • a 40% non refundable tax offset on R&D expenditure to companies with an aggregated group turnover of greater than $20M which can be carried forward for use in future income years.

The ability to cash out the tax incentive rather than create tax losses (which can only be utilised in the future) will be of particular benefit to smaller companies. Start-up companies with high levels of R&D expenditure, and which are yet to commercialise a product, will find the new scheme especially advantageous.

Claiming the R&D tax incentive is a two stage process.

Firstly, companies must identify and file their R&D activities with AusIndustry by completing an R&D application form for each of the projects. AusIndustry will then provide companies with a Notice of Registration and a Registration Number.

Companies can then complete an R&D tax schedule for the related R&D expenditure using the Registration Number provided.

Companies that have already put in their Income Tax Return (ITR) for the period can still claim the benefit via an amended ITR, but will need to identify their R&D activities to AusIndustry prior to receiving the benefit.

The new application form for the program is more complex than previous forms and requires companies to have a clear understanding of the definition of ‘core’ and ‘directly related’ activities. Companies looking to complete an application form themselves are encouraged to review the new definition of R&D activities, and maintain documentation of their experimental activities.

For help with your R&D tax claim under the new legislation, please contact Kate Mahady, Director of R&D tax services at Watermark Advisory Services.