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Proposed Changes to the Research and Development (R&D) Tax Incentive
To encourage R&D Incentive in Australia, make it easier for the businesses to access concessions and to navigate the economic impact of the pandemic, the government has proposed the following changes:
Aggregated Annual Turnover | R&D Intensity^ | Proposed Premium | Proposed R&D Tax Offset Rate | |
Company Tax Rate 25% | Company Tax Rate 30% | |||
Less than $20m | N/A | 18.5% | 43.5% | 48.5% |
$20m or more, or controlled by exempt entities | Less than 2% | 8.5% | 33.5% | 38.5% |
2% or more | 16.5% | 41.5% | 46.5% | |
^ R&D intensity is a measure of the company’s annual R&D expenditure as a proportion of its total annual expenditure
The government has stated that it will not proceed with the $4 million cap on annual cash refunds for companies with aggregated turnover of less than $20 million.
For companies with aggregated turnover of $20 million or more, the intensity tiers will be reduced from three tiers to two, with the increased R&D premium.
The starting date is deferred to 1st July 2021 from 1st July 2019.
Tax and tax planning can be a complicated and evolving process – it’s important to have an accounting partner who knows the game, is across all legislation and understands your situation and what you want to achieve. If you would like to know more about our tax planning services and how you could reduce your tax exposure, please call our office on (08) 8172 1444 or email our friendly team.