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12 Oct 09 Research and development tax credit (offset)

The ATO has provided information about changes to the R&D tax concession.

In the 2009-10 Budget, the Government announced that it will replace the existing R&D Tax Concession with a simplified R&D Tax Credit (offset) starting from the 2010-2011 income year. A transitional measure will apply to the 2009-10 income year.

From 2010, a 45% refundable tax credit (offset) will be provided to small firms with an annual turnover of less than $20 million – equivalent to a deduction of 150%. This means that firms will receive a refundable tax offset of 45% of their R&D spending when they file their tax return.

A 40% non-refundable tax credit (offset) will be available from that same year to firms with an annual turnover of more than $20 million – equivalent to a deduction of 133%. Companies undertaking R&D in Australia where the intellectual property is held offshore by an associated entity, or companies undertaking R&D in Australia that are foreign owned, will also be able to access the non-refundable tax credit (offset).

As a transitional measure for 2009-10, the R&D expenditure cap for the existing R&D Tax Offset will be lifted from $1 million to $2 million. This cap will not apply from the 2010–2011 year.

The existing R&D Tax Concession Premium and International Premium will be abolished and eligibility criteria will be tightened to provide better targeted support.

Legislation to bring the transitional measure for 2009-10 into effect is contained in Tax Laws Amendment (2009 Measures No. 4) Act 2009 (No. 88 of 2009) which received Royal Assent on 18 September 2009.

For a copy of the ATO advice, go here


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