R&D Tax Incentive ATY Advisory What is the R&D Tax Incentive? Australian Governments principal measure to encourage industry investment in research and development. It is a broad-based, marketdriven entitlement program that aims to boost company competitiveness, improve productivity and deliver economy-wide benefits to Australia. Jointly administered by AusIndustry and ATO.
Introduction to the R&D Tax Incentive Scheme Tax Benefits of undertaking R&D Up to 45% refundable tax credit Permanent benefit of 15 c per dollar spent on R&D activities Linking R&D activities to Tax Benefits Cash refund within 30-45 days after filing company tax return Provides R&D working capital by increasing operating cash
flow months after the end of Timeline of claiming 10 financial year for the company when R&D activities occurred Tax benefits vs. Can be obtained successively conducted R&D for multiple financial years Calculation of R&D Tax Offset - Example Tax Profit/Loss $100 000 (Add back) R&D Expenditure
-$50 000 -$100 000 -$200 000 $200 000 $200 000 $200 000 $200 000 $200 000 $200 000 Subtotal $300 000 $250 000 $200 000 $150 000
$100 000 $0 Taxable income or loss $300 000 $250 000 $200 000 $150 000 $100 000 $0 Company Tax Payable
$90 000 $75 000 $60 000 $45 000 $30 000 $0 Refundable R&D Tax Offset $90 000 $90 000
$90 000 $90 000 $90 000 $90 000 $0 $15 000 $30 000 $45 000 $60 000 $90 000
Tax Cash Refund $50 000 $0 What is the R&D Tax Incentive? Aggregated Turnover < $20M Aggregated Turnover > $20M 45% refundable tax offset 40%
non-refundable tax offset R&D Tax Incentive Application Process Submission to AusIndustry (R&D Registration) Submission to ATO (Company Tax Return Lodgement) R&D Tax Incentive Application Process Submission to AusIndustry R&D Registration Form Submission Lodged within 10 months of the end of financial year in which R&D is conducted. (April 30 for June Year Ends) Can declare future R&D to be done in future financial years with estimated
budget expense Receive Innovation Australia Registration Number Upon AusIndustry approval, receive an Innovation Australia Registration Number (IR) Use the Innovation Australia Registration Number (IR) to lodge Company Tax Return R&D eligibility criteria Is your Company a propriety limited enterprise? (ie not a trust, partnership, sole trader) Did you carry out eligible R&D activities in the past financial year? Did you incur a minimum of $20,000 in R&D expenditure?
Technical Objectives New Knowledge Technical Unknowns R&D Activities (experimentation): Core Activity Supporting Activity New products or processes to be generated by conducting the project New Knowledge
Examples: new applications, algorithms, platforms, processes, portals etc. Must not be achievable based solely on publically available information. Private information is acceptable Technical outcomes that cannot be known
without conducting experiments Technical Examples: Unknowns performance and efficiency of systems, functionality of process, integration of software etc Must have encountered technical challenges/ difficulties (not
social sciences) Development of IT products Integration of Packages Experimentation Trial runs Testing of technologies Definitions of R&D activities Activities related to core R&D or activities related to
dominant purpose of undertaking R&D Supporting R&D Core R&D Core R&D Experimentation to generate new knowledge by adopting scientific methodologies Core R&D activities may include: Development of software
Unit tests, dry test runs System integration Payments to contractors Cloud hosting/integration Supporting R&D activities may include: Literature searches or reviews that help design the experiment Background research Planning and overseeing the experiment Designing and producing test subject, equipment, prototypes etc. to be used in the experiment
Excluded Software R&D Subject to the same eligibility requirements as other R&D but with an exclusion. Software developed for an applicants internal administration are excluded as core. This may include: Business applications (payroll, accounting, invoicing, ordering, quality control, reporting, information management) Managment Information Systems Enterprise Resource Planning Software Excluded Software R&D The exclusion is not intended to apply to: Software of an applied nature (ie. that forms part of an electrical or mechanical device such as industrial equipment or consumer products) Software developed for the purpose of sale on a commercial basis
Software directly related to the delivery of services to customers Eligible expenses Staff time and corresponding wages Company Overheads License fees of software used in R&D Contractor costs including applications developed on your behalf Travel expenses Case Study Example Objective
Development of a web and mobile e-commerce application New Knowledge Technical Unknowns Integration of individual features User interface and user experience design Search engine functionality Development of new software and system enabled tools Development of live stocktake
Development of customised search engine tool New APIs and Algorithms developed Case Study Example Labour Costs $20,000 Overheads $20,000 Contractor $10,000 Other $5,000 Eligible R&D Expenditure $55,000
CASH REFUND up to $24,750 of R&D examples The following examples of IT projects that may be eligible for the R&D tax incentive: Database management Server management and cloud services Software development, including Mobile and web applications Development of portals About ATY Advisory
Our team has extensive knowledge about the R&D tax incentive. Our broad experience with a variety of industry sectors will provide us with the best possible understanding to maximise your potential tax savings. To date, we have successfully claimed over $6m in R&D expenditure ATY Advisory Team Technical Experts Analyse technical data Prepare technical deliverables Financial
Experts Senior Advisors Analyse eligible expenditure Provide insight to evaluation of regulatory systems Maximising your benefit Insight of practical and administrative protocols connected to ATO
Contingent fees Our fee structure is on a fully contingent basis. This means fees are only charged as a small percentage of a successful R&D claim, if no R&D is claimed, we will not render any fees.
