“Businesses that innovate are twice as likely to boost their productivity and more than twice as likely to put on staff”, so said Federal Minister for Industry & Innovation Mr Greg Combet. Where the Australian government’s aspiration is to boost the economy through its new Research & Development tax incentive program, businesses can also experience tangible benefits if they undertake R&D activities and satisfy the income tax requirements.
So, just how does a complying business get a benefit under the R&D tax incentive program? Firstly, the legislation stipulates a two-tier approach; that is for companies with annual turnover either more than $20million (grouped), or alternatively less than $20million (grouped).
Simply put, where annual turnover exceeds $20million, a company will get a 40% non-refundable tax offset. For turnover less than $20million, the tax offset increases to 45% refundable. These offsets provide either a 10c or 15c premium tax benefit over the standard 30% company tax rate.
Significantly for smaller or start-up companies eligible for the 45% tax incentive, R&D expenditure can be partly converted into an income tax refund upon lodgement of the annual return. Since R&D entities, like other taxpayers, enjoy the privilege of self-assessment, every claimant can determine what activities and expenditures are eligible for the tax incentive. Of course, the ATO may subsequently require a taxpayer to substantiate their claim. It is in this context that Eundo helps companies prior to lodgement of the tax return to document full particulars of a claim. This work is performed by an experienced tax professional who is a registered agent with the ATO.
