Australian Government’s Research and Development Tax Incentive Program

skip to contentskip to navigate search For the menu below: if you move through the content using the Tab key, sub-menus will expand for each item. When moving through with arrow keys, screen readers will not always expand the sub-menus Registrations Business Information Grants & Programs Expertise & Advice Events & Training News Home › Grants & Programs › Research and Development Tax Incentive RESEARCH AND DEVELOPMENT TAX INCENTIVE Offset your R&D costs to help innovate and grow your business Last Updated: 24 December 2020 On this page At a glance Overview Eligibility Applying Advance and Overseas Findings Getting it right Examination of Registrations Contact News and events Customer stories Key documents Changes to extensions on application deadlines from 1 January 2021 If you are needing to apply for an extension of time to lodge you application you should be aware of changes to the legislation that take effect from 1 January 2021. For more information read the Lodging a late application page. Research and Development Tax Incentive The Research and Development Tax Incentive (R&D Tax Incentive or R&DTI) helps to offset some of the costs you put into eligible R&D, which benefits the wider Australian economy. Open Application detail: You can apply to register your eligible R&D with the Department of Industry, Science, Energy & Resources within 10 months of the end of your company’s income year. You may then receive a tax offset when you lodge your Company Income Tax Return with the Australian Taxation Office. What do you get? You may be eligible for a tax benefit to offset some of the cost of your eligible R&D activities. This may be a refundable or non-refundable offset depending on your company. Who is this for? Your company needs to be liable to pay income tax in Australia, and conduct at least one activity that meets the definition of a core R&D activity, and incur the minimum eligible R&D expenditure. Help, guides and resources for the R&D Tax Incentive Read extra information and guidance to help you decide if you're eligible and if you want to apply for registration. Overview The R&D Tax Incentive is a self-assessment program. When you self-assess your R&D activities against the eligibility requirements, you need to judge whether your activities meet the legislated criteria. The legislation which you are to self-assess against is the Industry Research and Development Act 1986, and the Income Tax Assessment Act 1997. You need to ensure your application for registration and you claim for the R&D Tax Incentive are correct. You must provide accurate information to the Department of Industry, Science, Energy and Resources (the department) and to the Australian Tax Office (ATO). The department (on behalf of Industry Innovation and Science Australia) jointly manages the R&D Tax Incentive with the Australian Taxation Office (ATO). The department manages the registration of R&D activities, and the ATO manages the rules on eligible entities and costs. Consulting an R&D tax adviser or tax agent to prepare your application for registration and tax offset claim does not guarantee your eligibility. We may review the activities included in your R&D Tax Incentive claims to ensure they comply with the law during or after your registration. The ATO may also check if the R&D costs you claim are eligible. Open transcript How the R&D Tax Incentive can help you Time: 02:54 This short animation video can assist you to better understand the benefits of the R&D Tax Incentive and who is eligible to apply. Download descriptive transcript DOCX - 0.02MB Eligibility What are the eligibility criteria? To be eligible for the R&D Tax Incentive you must: be a company that is liable to pay income tax in Australia conduct at least one activity that meets the definition of a core R&D activity have eligible R&D expenditure greater than $20,000 If your eligible R&D expenditure is less than $20,000, you can still apply for the offset if you use a registered Research Service Provider (RSP) to conduct your R&D. You may claim for certain R&D conducted overseas under some circumstances, however you must have an Advanced and Overseas Finding to claim overseas costs. Eligible R&D activities are 'core R&D activities' and 'supporting R&D activities'. To register, you must have at least one core R&D activity. Supporting R&D activities are optional. The below definitions are extracts from section 355 of the Income Tax Assessment Act 1997. Eligibility review The department may conduct checks that registered activities comply with the law after you have registered. Similarly, the ATO may check if the R&D costs being claimed are eligible after registration. Open all button toggle all accordions Who is eligible? What are core R&D activities What are supporting R&D activities? Excluded activities What R&D expenditure is eligible? Are you conducting R&D activities overseas? Read the guide to help you self-assess if your activities are eligible core R&D activities or supporting R&D activities. Applying How do you apply? To claim the R&D tax offset in your annual income tax return, you must first register your R&D activities under the R&D Tax Incentive. You must register separately for each income year you wish to claim. Download a new version of the application form each time you apply. The latest form may have new fields. You can pre-fill the form with data from your last application. Apply for the R&D Tax Incentive now Use the application form to apply for registration of your R&D activities for the R&D Tax Incentive. Register for the year you want to claim the offset. Within 10 months of your company's income year. Before you lodge your company income tax return. Important: Information for applicants considering lodging a late application. Open all button toggle all accordions Extension to application deadlines due to impact of Bushfires 2019-20 and COVID-19 How to self-assess your application The process Research Service Providers (RSPs) Advance and Overseas Findings You can ask us to make an Advance or Overseas Finding as to whether your activities are eligible R&D activities. If you do not have a positive Overseas Finding, you can’t claim overseas expenditure. Advance and overseas findings are designed to provide certainty to you about the eligibility of your activities under the R&DTI. They provide a binding determination issued by us as to whether your activities are eligible to be claimed under the program. You will still need to apply to register your R&D activities after receiving an Advanced or Overseas Finding. COVID-19 and Advance and Overseas Findings Due to COVID-19 we understand you may not have been able to complete your application for an Advanced or Overseas Finding by the relevant due date in 2020. If your substituted accounting period ends before 31 December 2020, you can lodge a provisional application by 31 December 2020. You will then need to lodge your completed application by 31 March 2021. Important Note: There is no provision under the governing legislation for Advance and Overseas Findings to accept applications for substituted accounting periods for the 1 January 2020 to 31 December 2020 income year after 31 December 2020. The minimum details required in a provisional Advance or Overseas Finding application are: Company contact details. Descriptive name/title of each claimed R&D activity. You will still need to provide your R&D Tax Incentive registration receipt number when you lodge your R&D Schedule with the Australian Taxation Office. Submitting a provisional application is not enough to claim overseas R&D expenditure in your company tax return. We must issue you with a positive Advance or Overseas Finding. Only with a positive finding can you claim R&D expenditure for the 1 January 2020 to 31 December 2020 income year. You can still submit applications for Advance or Overseas Finding applications for the 1 July 2020 to 30 June 2021 income year before 30 June 2021. You may do this if you want an earlier answer on your eligibility. You can get further information from our Advance/Overseas Findings application notes. If you have any questions, you can contact us or call us on 13 28 46. Advance/Overseas Finding Application Form A positive Advance/Overseas Finding gives you assurance that your registered R&D activities will be eligible for claiming under the R&DTI. It is also a mandatory that you first obtain an Advance/Overseas Finding for any offshore activities that you will be registering for the R&DTI. For more information read Key documents: Findings. Open all button toggle all accordions What is an Advance Finding? What is an Overseas Finding? What are the Overseas activities criteria? Getting it right Your R&D Tax Incentive Journey The Integrity Framework user journey The Integrity Framework takes into account integrity risk and behavioural factors that influence program participants. Diagram showing steps of a typical journey of a R&D TI applicant. There are three main route. Those who are categorised as Getting it right. Those categorises as trying to get it right. And categorised as high risk and do not comply. Not all situations have been covered in this user journey. There may be other options available, depending on your particular circumstances. AusIndustry works with the Australian Taxation Office on the joint administration of the program, including on compliance activities. The above User Journey guides you through the steps along your journey and possible interventions you may experience, including if should you be selected for integrity management activities. For more detail on the steps in user journey, view the Steps in the user journey. Registration does not mean eligibility. We will work with you through a fair, easily understood and transparent process, and ensure regular interactions with you as you navigate your application. For more information on the user journey, our Service Commitment and Integrity Framework, please view Navigating the R&D Tax Incentive. Records we expect you to keep When you apply to register for the R&D Tax Incentive, we expect you to keep records that show your activities meet the eligibility criteria as defined in the law. We expect that you will keep records at the time you carry out your R&D activities (known as contemporaneous records). These records help you self-assess your eligibility, save you time, and reduce the risk of not being able to prove that your activities are eligible. You may later make further notes to support your original records. For us, documents created after activities are carried out are generally inadequate on their own. Compliance readiness guide on record keeping for the R&D Tax Incentive PDF · 0.46 MB Type of records to keep Open transcript What is scientific research? Time: 02:26 The Australian Government’s R&D Tax Incentive encourages businesses of all sizes, to generate new knowledge through research and development (R&D). The program offers a generous tax offset for companies investing their time and effort in conducting eligible R&D. Open transcript What is a hypothesis and an experiment? Time: 01:58 To apply for the R&D Tax Incentive you need to conduct research in a scientific way. The program offers a generous tax offset for companies investing their time and effort in conducting eligible R&D. Examination of registrations You are responsible for making sure you meet the eligibility criteria for the program. While it is a requirement to register your R&D activities with the Department each year, receiving a registration number does not mean that your R&D activities are eligible under the Incentive. A business can still be contacted by the Department for education, guidance or compliance engagement. Your registration (or registrations) may be examined to see if they comply with the eligibility requirements of the program. If your registration is examined, you will be asked to provide records to prove the eligibility of registered activities. If your registration is examined, you will have 30 days to provide evidence. A further period of up to 14 days may be granted on request in accordance with the Decision-making Principles. The examination of your registration may lead to a Finding about the eligibility of all or some of your registered activities. You may need to amend your tax return if any of your registered activities are found to be ineligible. Open all button toggle all accordions Pre-registration examination Post-registration examination Help to get it right We are committed to supporting innovative Australian businesses. We are here to support you to understand how to apply for and comply with the R&D Tax Incentive program. If you are currently under review or examination, please contact your case manager. Their details are on the letters we have sent to you or your advisor. Glossary of terms Need help? Contact us for help with your application or to find out more. Contact Us 13 28 46 Monday – Friday, 8am – 8pm across Australia News and events Subscribe to the Information Bulletin for regular updates. Insights podcast The R&D Tax Incentive Insights podcast contains information on a range of topics to help you understand the program. R&D Tax Incentive Newsletter Subscribe to the Information Bulletin for program updates. Events and information sessions Events and information sessions help you understand the R&DTI. Upcoming reforms Find information on the upcoming reforms to the R&D Tax Incentive. Customer stories Learn about some of our previous customers and how an R&D Tax Incentive has helped them. Micro-X Limited - Leveraging carbon nano-tube technology to save lives Dr John Lasich and Richard Payne from RayGen Resources chatting RayGen – world first solar technology Find out when our informative events are happening in your area. EVENTS AND INFORMATION SESSIONS Key documents Industry Research and Development Act 1986 Income Tax Assessment Act 1997 We launched a refreshed Guide to Interpretation in November 2020. The refreshed Guide has clear language and less duplication. It helps you to plan, conduct and register eligible R&D. If you have any feedback or questions about the refreshed guide, contact rdti.engagement@industry.gov.au. Guide to Interpretation PDF · 1.80 MB DOCX · 0.76 MB Refreshed Guide to Interpretation - Overview of Changes PDF · 0.26 MB DOCX · 0.09 MB Compliance readiness guide on record keeping for the R&D Tax Incentive PDF · 0.46 MB Key documents: Eligibility How should companies group R&D activities PDF · 0.15 MB R&D Tax Incentive at a glance PDF · 1.08 MB DOCX · 0.23 MB When could scaling-up involve eligible R&D activities PDF · 0.14 MB Key documents: Fast facts Upcoming changes to the R&D Tax Incentive: Overview fact sheet PDF · 1.72 MB DOCX · 0.09 MB 100 million dollar threshold registration administrative arrangements PDF · 0.10 MB Fact sheet for accountants PDF · 0.15 MB Fact sheet on Eligibility of Activities PDF · 0.14 MB R&D Tax: what does it offer PDF · 0.14 MB Record-keeping and R&D planning PDF · 0.13 MB Registration information sheet PDF · 0.67 MB Simplified worked examples PDF · 0.12 MB R&D Tax Incentive: application notes PDF · 0.54 MB DOCX · 0.14 MB Key documents: Findings Guide to findings PDF · 0.52 MB Advance/overseas finding application notes PDF · 0.70 MB DOCX · 0.19 MB Overseas findings - How long does an overseas finding last PDF · 0.13 MB What does 'not available in Australia' mean PDF · 0.14 MB Share Email Print About Us About Us Contact Us Privacy Quick Links Accessibility Legal Information Other Languages Sitemap Related Sites Business Registration Service Australian Business Licence and Information Service Business Consultation Centre for Defence Industry Capability ABN Lookup Subscribe to our newsletter LinkedIn Facebook Youtube Twitter Call us 13 28 46 Australian Government logo. 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