We jointly administer the research and development (R&D) tax concession with AusIndustry.
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Removal of the R&D tax concession
When considering how the R&D provisions apply to your circumstances, remember that for income years starting on or after 1 July 2011 you no longer use the R&D tax concession. You need to consider the new R&D tax incentive. The concession and the new incentive apply differently. For further information, including fact sheets and a calculator, refer to Research and development tax incentive - home.
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The aggregate R&D amount threshold
What threshold applies?
To be eligible for the R&D tax offset for income years starting on or after 1 July 2009, the aggregate R&D amount of your company and your company's group members (while they are grouped during that income year) must not exceed $2 million. For earlier income years starting after 30 June 2001 but before 1 July 2009, this threshold was $1 million.
How is this threshold calculated?
The $2 million threshold for the R&D tax offset is calculated according to your aggregate R&D amount for the income year. It also considers the aggregate R&D amount of any companies you are grouped with.
The components of the aggregate R&D amount are defined in subsection 73B(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The amount is also used to work out if you meet the $20,000 eligibility threshold for claiming R&D expenditure (excluding contracted expenditure to a registered research agency) and depreciation at the 125% rate.
If, for an income year starting after 1 July 2009, your company's aggregate R&D amount is greater than $2 million, can you choose the offset by only claiming up to the amount of $2 million?
You cannot access the tax offset if your aggregate R&D amount exceeds $2 million. The R&D expenditure of any grouped companies will contribute to the aggregate and they will also be unable to claim the offset if the aggregate exceeds $2 million.
If your aggregate R&D amount exceeds $2 million in the income year, can you choose not to claim some of that expenditure under the R&D tax concession?
Choosing not to claim an eligible R&D deduction will not reduce your aggregate R&D amount. You will still be required to include the relevant amounts for this unclaimed R&D expenditure when calculating your aggregate R&D amount.
Is interest on funding used to finance your R&D activity expenditure included in your aggregate R&D amount?
You should include this interest expenditure when calculating your aggregate R&D amount, even though it does not attract a 125% deduction. By definition, this interest expenditure will form part of your aggregate R&D amount, even if you claim it as a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Does 'clawback' affect your aggregate R&D amount?
If you have received a grant and 'clawback' (section 73C of the ITAA 1936) has reduced your entitlement to the additional 25% deduction on some or all of your expenditure, this will not affect your aggregate R&D amount.
The various expenditures on a project must still be included when calculating your aggregate R&D amount, even if:
- you choose not to register a particular project because you received a grant
- after the clawback, there is no remaining entitlement to the additional 25% deduction.
When are you required to lodge your R&D schedule?
The R&D schedule must be lodged at the same time as your company's income tax return, or the relevant amendment request, in which the R&D tax concession claim is made. All R&D tax concession claims, including amendments, must be accompanied by a Research and development tax concession schedule (R&D schedule).
All paper R&D schedules, including the excel version (available from the Research and development tax concession homepage) must be lodged with the appropriate company return for the relevant income year. R&D schedules should be sent to:
Last Modified: Monday, 20 August 2012