R&D Tax Incentive

R&D Tax Incentive

What is the R&D Tax Incentive?

The R&D tax incentive is a rebate you get for developing new products and services. It allows you to claim back up to 43.5% of the costs related to research and development.

 

How does the R&D tax incentive work?

You need to undertake eligible R&D activities that involves research and experimentation.

You also need to:

  • spend over $20,000
  • operate as company (no trusts, partnerships, sole traders)
  • undertake R&D activities in Australia

 

How do I claim R&D tax relief?

In order to claim the R&D tax incentive, you need to lodge an Activity Registration every year that describes your R&D work.

You will be asked to break down your R&D experiment into two key components:

  • Outcome – whether an expert could predict the outcome in advance
  • Purpose – the R&D is conducted for the purpose of generating new knowledge
Once you have registered your R&D with AusIndustry  you will then be able to include include an R&D Schedule in your R&D Tax Incentive Schedule 2022 – Editable Form and get an R&D tax offset.
 

 

Timing

If your income year ended on 30 June 2022, the deadline to submit your application is Tuesday 30 April 2023

 

Tips for applying

From July 2022 all applications have been submitted using the new customer portal. We’ve now processed over 5000 applications this way and have the following tips to share: 
  • When completing your application in the customer portal remember to save your work regularly, the portal will not save this automatically
  • Ensure that you select the correct income year before starting your application.
  • You can change the income year for a draft application by deleting the draft application in the portal and beginning a new application for the correct income year.
  • If you have requested an overseas finding, and submit your registration application before the finding is made, include the overseas activities in your application (noting a finding has been requested). 
  • There’s no need to vary your application to include advance and overseas finding numbers – they are already in our system.

How to Maximise the R&D Tax Incentive

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How is the R&D tax credit calculated?

The R&D tax incentive provides a tax rebate of between 8.5% to 43.5%.

So if you spend $100,000 on developing a new product,  you could get back between $8,500 and $43,500 depending on the company revenue and profitability.

If you are in profit, you are likely to get an R&D tax offset rather than cash back.

See the R&D tax calculator for information.

 

What qualifies as R&D?

To be eligible for the R and D tax incentive, you need to ask yourself if what you are doing can be considered innovative in your field:

  1. Novel – Are you developing something that does not currently exist?
  2. Testing –Did you need to test the performance of what you are creating?

You could be:

  • developing new software for the hospitality industry
  • crafting bespoke solutions using raw materials
  • engineering new devices for tracking and monitoring equipment.

 

How does the government define R&D?

This is how the government define research and development in the R&D tax incentive legislation:

“Core R&D activities are experimental activities whose outcome cannot be known or determined  in advance on the basis of current knowledge,  information or experience, but can only be determined by applying a systematic progression of work “

But, are you an expert?

The government want to know whether an expert could predict the outcome?
So, if you know what you are doing, then the R&D Tax Incentive could be a good grant to go for.

Speak to an R&D tax incentive consultant for more information of how R&D grants work.

How to Maximise the R&D Tax Incentive

Top 10 R&D Consultant Tips

What is an R&D grant?

An R&D grant is money you get back from the ATO for conducting eligible research and development activities. An R&D grant goes by many names including the R&D tax offset, R&D tax credit or R&D tax rebate. But they are all refer to the ATO R&D tax incentive.

This can be either in the form of cash back or a credit on the tax you need to pay.

The R&D grant ranges from 8.5% to 43.5%.

 

What is the R&D tax offset?

The R&D tax offset occurs when the R&D rebate is offset against the tax that you owe. So, say you owe $100k in tax and your R&D rebate is worth $30k, then your tax payable reduces to $70k.

If you earn less than $20M and are in loss, then you will get a cash rebate.

 

What is the R&D tax credit?

The R&D tax credit applies to companies earning over $20M. If there is no tax to pay, then the R&D tax credit will sit there like a carry forward loss and used in the future. There is no cash back.

 

Is R&D tax offset taxable?

The R&D tax offset is not taxable. It operates like a tax refund.

But, you need to check a few things with your accountant like:

Your accountant will be able to assist further with this, or send me an email.

 

What is an R&D company?

You can only claim the R&D grant if you have a company. Typically this is a Pty Ltd company. Entities that are excluded are, individuals, partnerships and sole traders.

 

Are you developing an app?

 

FAQ

Here is some additional information that might help you out with the R&D tax incentive:

 

R&D Tax Incentive – Latest News

23 June 2022 – Australian Government replaces mygovID with Digital Identity for 2022 applications

The R&D Tax Incentive Portal is transitioning to the Australian Government Digital Identity System to verify users.

This transition provides additional privacy and security assurances for you. The R&D Tax Incentive Portal won’t know which Digital Identity you’re using, and the Digital Identity you’re using won’t know you’re accessing the R&D Tax Incentive Portal.

As part of this transition, you will notice some changes to the login process when accessing the R&D Tax Incentive Portal with your Digital Identity.

From 29 June 2022, the login button will display ‘Continue with Digital Identity’, replacing the current ‘Login with myGovID’ button.

When you select ‘Continue with Digital Identity’ you’ll be given the option to select myGovID as your Digital Identity and asked to provide consent to share your information. During this process, we’ll inform you what information will be shared to access the R&D Tax Incentive Portal. Usually this is limited to your name, date of birth and contact details. You will also need to be authorised to represent your organisation for the R&D Tax Incentive Portal via Relationship Authorisation Manager (RAM).

Once you select myGovID as your Digital Identity, the steps to log in will be the same.

For information about myGovID, and for help with set up, please visit the myGovID website.

For information and support with RAM, please visit the Relationship Authorisation Manager website.

For information about Digital Identity, please visit the Digital Identity Website.

16 June 2022 – Advance or Overseas Finding Application Deadline

The deadline for applying for an overseas finding is 30 June 2021 for companies with a July to June income year – there is no discretion to accept late applications. Companies must apply for an Advance Finding or an Advance Overseas Finding before the end of the income year in which the activities are conducted.

You will need to use the new ANZSRCR 2020 Field of Research (FoR) classification when applying for a Finding from 29 June 2022. For applications submitted before this date, you will still use the ANZsRC 2008 FoR codes when registering through the portal. However, when you come to register those activities covered by the Finding, you will be asked to select codes from the ANZSRC 2020 FoR.

19 April 2022 – Extension of Time – Automatic 14 Day Approval

Extension of Time to the 3 May Deadline

If you are having troubles accessing the R&D Tax portal because the Relationship Authorisation Manager (RAM) is a pile of junk.
Contact Ben Cusack on [email protected] to get an automatic 14 day extension of the 3 May 2022 deadline.
I will need your company name, ABN/ACN and reason for delay.

19 April 2022 – R&D applications closing soon

If your income year ended on 30 June 2021, you have until Tuesday 3 May 2022 to submit your Research & Development Tax Incentive (R&DTI) application. You need to submit this application with AusIndustry before you can claim R&D offsets.

Applications can only be submitted through the R&DTII customer portal. You should start this process early to ensure your application is submitted before the deadline.

Source

 

R&D Tax Incentive – Latest Recipients

30 June 2022 – Bluechiip receives $1,090,000

Bluechiip (BCT) receives a $1.09 million R&D tax incentive refund from the Australian Tax Office for FY21 to support the company’s core chip technology transition into full-scale production.

Bluechiip provides advanced sample management solutions across a wide range of applications. Their solution is the only one that provides sample temperature with ID in cryogenic environments. 

Source

09 June 2022 – Telix Pharmaceuticals receives $17,250,000

Telix Pharmaceuticals has received a $17.25M R&D tax refund for the development and commercialisation of diagnostic and therapeutic products using Molecularly Targeted Radiation (MTR). 

Telix is a late-stage radiopharmaceutical company developing a broad portfolio of assets using Molecularly Targeted Radiation (MTR) MTR could potentially offer better-informed treatment decisions and truly personalised therapy. Telix’s research pipeline aims to address significant unmet medical need in prostate, kidney, brain and hematologic cancers.

Source

08 June 2022 – Paradigm receives $8,200,000

Paradigm Biopharmaceuticals (PAR) has received an $8.2 million research and development (R&D) tax incentive refund to reinvest in further research and will continue to support its global phase three clinical program in osteoarthritis and mucopolysaccharidosis (MPS) which causes a progressive cognitive and motor decline through treatment with PPS.

Paradigm Biopharmaceuticals is a commercially focussed drug repurposing company. They take an existing approved drug, which has demonstrated safety in its approved indication/s and repurpose that drug in a new, patented therapeutic application addressing areas of high unmet medical need. 

Source

06 June 2022 – Orthocell receives $2,100,000

Orthocell receives a R&D Tax Incentive of $2.1 million for the 2020/2021 financial year to further develop its products for the repair of a variety of bone and soft tissue injuries.

Orthocell Ltd is a regenerative medicine company dedicated to the development of novel collagen medical devices and cellular therapies for the repair and regeneration of human tendons, bone, nerve and cartilage defects.

Source

23 May 2022 – Calix receives $5,190,000

Calix Limited has received a payment of $5.19m from the Australian government associated with its R&D tax incentive claim for the 2020/2021 financial year to support the development of its world-leading carbon capture technology for application in emissions intensive industries such as cement and lime. 

Calix is a team of dedicated people developing a patented technology to provide industrial solutions that address global sustainability challenges. The core technology is being used to develop environmentally friendly solutions for advanced batteries, crop protection, aquaculture, wastewater, and carbon reduction.

Source

06 May 2022 – TNG receives $3,700,000

TNG receives $3.7 million as a refundable tax offset under the Federal Government’s research and development (R&D) tax incentive scheme to support its Mount Peake Vanadium-Titanium-Iron project in the Northern Territory and TIVAN processing technology.

TNG is an Australian resource and mineral processing technology company progressing towards development of its 100% owned world-class Mount Peake Vanadium-Titanium-Iron Project in the Northern Territory, Australia.

Source

21 April 2022 – PharmAust receives $708,000

PharmAust (PAA) receives a $708,000 research and development tax incentive refund to help strengthens the company’s financial position to execute upcoming clinical trials.

PAA is a clinical-stage company developing targeted cancer therapeutics to address both human and animal healthcare. The company specialises in repurposing marketed drugs lowering the risks and costs of development. These efforts are supported by PAA’s subsidiary, Epichem, which is a highly successful contract medicinal chemistry company that generates significant annual revenues.

Source

05 April 2022 – Recce Pharmaceuticals receives $3,000,000

Recce Pharmaceuticals has received A$3,084,955.19 cash as part of a Research and Development Tax Incentive rebate from the Australian Tax Office for the year ending June 30, 2021, to support the development of a new class of Synthetic Anti-infectives.

Recce Pharmaceuticals Ltd (ASX: RCE, FSE: R9Q) is pioneering the development and commercialisation of a New Class of Synthetic Anti-Infectives designed to address the urgent global health threat posed by antibiotic-resistant superbugs and emerging viral pathogens.

Source

30 March 2022 – Medtech Opyl receives $361,427

Medtech Opyl (ASX:OPL) has received a $361,427 research and development (R&D) tax incentive refund for its ongoing development of Opyl’s digital clinical trial recruitment platform, Opin. 

Opyl is a new generation company that provides leading biopharma and health organisations access to emerging AI-assisted technologies and professional guidance to understand and improve healthcare design, development and delivery.

Source

07 February 2022 – Clarity Pharmaceuticals receives $3,262,861

Clarity Pharmaceuticals has received a R&D Tax Incentive refund of $3,262,861 for FY2 to use to further finance the development of its Targeted Copper Theranostics (TCT) platform of products for various cancer indications.

Clarity is a clinical stage radiopharmaceutical company developing next-generation theranostic (therapy and imaging) products, based on their platform SAR Technology. 

Source

26 January 2022 – Patrys receives $1,188,581

Patrys receives a $1,188,581 R&D Tax Incentive Refund to further developing the Company’s deoxymab technologies.

Patrys listed on the Australian Stock Exchange (ASX) in 2007 to develop new antibody therapies for the treatment of cancer. In 2016, Patrys secured an exclusive, worldwide license from Yale University for the use of deoxymab antibodies as human therapeutic agents for treatment and management of cancer.

Source

How to Maximise the R&D Tax Incentive

Top 10 R&D Consultant Tips
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