Who must complete a Research and development tax incentive schedule?

You must complete and lodge a Research and development incentive schedule 2012 if you make a claim at item 22 on your Company tax return for an R&D tax offset under the R&D tax incentive, that is, Division 355 of the Income Tax Assessment Act 1997 (ITAA 1997).

Who can claim the R&D tax incentive?

You may be entitled to claim the R&D tax incentive in your Company tax return 2012, if you are an R&D entity that has registered its R&D activities with Innovation Australia through AusIndustry for the 2011-12 year of income.

Only R&D entities can register R&D activities and claim the R&D tax offset. You are an eligible R&D entity if you are a corporation that is:

• incorporated under an Australian law, or
• incorporated under foreign law but an Australian resident for income purposes, or
• incorporated under foreign law, and
  
  • a resident of a country with which Australia has a comprehensive double tax agreement which includes a definition of 'permanent establishment', and
  • which carries on business in Australia through a permanent establishment as defined in the double tax agreement.
   

You are not eligible for the R&D tax incentive if you are:

• an individual
• a corporate limited partnership
• an exempt entity (because your entire income is exempt from income tax).

Trusts are not generally eligible R&D entities. The exception is a body corporate in the capacity of trustee for a public trading trust.

You must register before claiming

You must register before you make a claim for the R&D tax incentive on the company's tax return. You must lodge an application for registration of the activities with Innovation Australia within 10 months of the end of your income year. For example, if your income year ends on the 30 June, then you must register with Innovation Australia by 30 April of the following year.

On whose behalf are the R&D activities conducted?

Generally, an R&D entity is only entitled to a tax offset if the R&D activities were conducted for one of the entities below:

• the R&D entity itself
• a foreign corporation that is
  • connected with, or an affiliate of, the R&D entity
  • a resident of a country with which Australia has a comprehensive double tax agreement.
   

R&D activities that are conducted for a foreign corporation must be conducted under a written agreement between the R&D entity and the foreign corporation.

Additionally, if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia, it may be entitled to an R&D tax offset:

• if the R&D activities are conducted for itself, and
• provided they are not also conducted for that permanent establishment.

Who administers the R&D tax incentive?

The R&D tax incentive is jointly administered by AusIndustry, part of the Department of Innovation, Industry, Science and Research (DIISR), and the Australian Taxation Office (ATO).