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R&D Tax Concession
The federal government introduced the R&D Tax Concession to encourage
businesses to innovate through the development and marketing of
commercial products, processes and services—key drivers of productivity,
international competitiveness and economic growth.
The R&D Tax Concession recognises the importance of innovation
and allows companies undertaking research and development (R&D) to
claim an
additional tax deduction for eligible expenditure on eligible activities.
Tax Concession/Premium/Offset
For companies undertaking R&D activities the Concession enables
them to deduct up to 125% of eligible R&D expenditure, instead of
the 100%
deduction provided on their income tax return. This is not merely timing
difference but a permanent benefit providing significant value to claimants.
Basic Eligibility
There are basic eligibility requirements for companies seeking to claim
the
R&D Tax Concession:
- The company must be incorporated in Australia
- R&D activities are carried out by or on its own behalf
- The company generally undertakes R&D activities in Australia
- The company must incur a minimum R&D expenditure of $20,000
- R&D activities must be carried out in accordance with an approved
R&D Plan
- The company must seek to exploit the results of the R&D
Common Sources of R&D
In a competitive environment companies must continue to innovate in
order to reduce costs, improve efficiency, increase asset life and develop
new products. This drive for increased competitive position often produces
readily identifiable R&D activities within a company, including:
- Products - higher quality, different physical attributes,
reduced costs per
product, use of different raw materials, etc
- Processes - develop new production processes, reduced
costs, higher
throughput, integration of new processes into existing processes,
unique
site or environmental characteristics, improved controls, etc
- Maintenance - increase the life of assets or consumables,
reduce wear, etc
- Environmental - reduction in inputs such as water,
energy, raw materials,
waste and emission reduction, etc
- Trials - to test a new product or process, or to overcome
uncertainties, etc
There are a number steps involved in claiming the R&D Tax Concession,
including identification of eligible projects, preparation of R&D
plans,
identification of eligible expenditure, preparation compliance
documentation and registration with relevant regulatory bodies.
The process can sometimes be daunting for the inexperienced or
companies lacking resources and time. BDO has a specialist R&D Tax
Concession team that can provide tailored assistance to suit your
business needs.
Contact:
Tracey Murray, Partner
Email:
Phone: +61 7 3237 5832
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