The research & development (R&D) tax concession is a joint initiative of the Tax Office and AusIndustry.
The R&D tax concession is an ongoing scheme designed to increase the level of R&D being conducted by Australian companies. It is broad-based, not industry specific, and market-driven with the applicant entity deciding upon the scope and timing of the R&D.
It enables companies to deduct up to 125% of eligible expenditure incurred on R&D activities from assessable income when lodging their income tax returns. For expenditure that qualifies for the 125% concession (excluding plant related expenditure), an additional 50% deduction called the ‘175% premium R&D tax concession’ may be available. It is available to those companies that increase their level of this type of R&D expenditure relative to their average of such R&D expenditures over the previous three years. Grouping and other rules apply. Companies can claim the premium for their years of income that commence after 30 June 2001.
An ‘R&D tax offset’ (equivalent to the value of the R&D tax concession) is available to companies with an annual turnover of less than $5 million and whose aggregate R&D amount is more than $20,000 and less than $1 million per year. These threshold tests are also subject to grouping rules. Eligible companies can elect to receive the offset of 30 cents for each dollar that would otherwise have been claimable as a deduction.
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