Research and development tax incentive - legislation

The research and development (R&D) tax incentive provides a targeted tax offset to encourage certain companies to conduct R&D that benefits Australia.

It provides generous benefits for companies performing eligible R&D activities and has the following two core components:

• a 45% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million - unless they are controlled by tax exempt entities
• a 40% non-refundable tax offset for all other eligible entities.

The tax incentive replaces the R&D tax concession and is jointly administered by Innovation Australia (assisted by AusIndustry) and us.

The tax incentive is administered under two main pieces of legislation:

• Division 355 of the Income Tax Assessment Act 1997
• Part III of the Industry Research and Development Act 1986.

The following material provides a guide to interpreting and understanding the intention of the legislation:

• Taw Laws Amendment (Research and Development) Bill 2010 Explanatory Memorandum
• Taw Laws Amendment (Research and Development) Bill 2010 Supplementary Explanatory Memorandum.

For more information about the R&D tax incentive, refer to Research and development tax incentive - home.