Step 5 – Calculate your tax offset
Once you have worked out which offset you can claim, you can calculate the amount of your tax offset:
- to calculate your claim for the 43.5% refundable R&D tax offset, multiply the total of the notional deductions by 43.5%
- to calculate your claim for the 38.5% non-refundable R&D tax offset, multiply the total of the notional deductions by 38.5%.
Where your notional deductions exceed $100 million for an income year, your claim for the R&D tax offset is equal to the sum of notional deductions for the first $100 million multiplied by the rate determined above, and the notional deductions in excess of $100 million multiplied by the company tax rate. (This applies to income years starting on or after 1 July 2014 and before 1 July 2024).
We've included three examples (below) to help you work out which calculation might apply to you.
Example 1
Company X is an R&D entity entitled to notional deductions of $1,500,000 for R&D expenditure. Company X's aggregated R&D turnover for the income year is $16,000,000. Company X is not controlled by any exempt entities. Therefore, Company X is entitled to the 43.5% refundable R&D tax offset, which is calculated as follows:
43.5% x $1,500,000 = $652,500
End of example
Example 2
Company Y is an R&D entity entitled to notional deductions of $9,000,000 for R&D expenditure. Company Y's aggregated R&D turnover for the income year is $40,000,000. Company Y's turnover is greater than $20,000,000 so the company can claim the 38.5% non-refundable R&D tax offset, which is calculated as follows:
38.5% x $9,000,000 = $3,465,000
End of example
Example 3
Company Z is an R&D entity entitled to notional deductions for monetary CRC contributions made, which total $18,000 in the relevant income year. Company Z's aggregated R&D turnover for the income year is $4,000,000. Company Z is not controlled by any exempt entities. The company can claim the 43.5% refundable R&D tax offset, which is calculated as follows:
43.5% x $18,000 = $7,830
End of example
Example 4
Company XYZ is an R&D entity entitled to notional deductions of $120,000,000 for R&D expenditure. Company XYZ's aggregated R&D turnover for the income year is $400,000,000. Company XYZ's turnover is greater than $20,000,000 so the company can claim the 38.5% non-refundable R&D tax offset on notional deductions up to $100,000,000, and the balance of $20,000,000 can be claimed at the company tax rate of 30%. This is is calculated as follows:
38.5% x $100,000,000 =
30% x $ 20,000,000 =
|
$38,500,000
$ 6,000,000
|
Total R&D claim =
|
$44,500,000
|
End of exampleNext step:
You will need to work out the amount of your R&D tax offset before lodging your claim.