The federal government as part of the Omnibus budget savings bill has reduced the R&D Tax Incentive by 1.5% for future years. If you have been engaged in R&D prior to 1 July 2016, your entity is still eligible to claim for the 45% refundable tax offset or the non-refundable offset rate of 40%. However, the company must lodge the application within ten (10) months after the end of the company’s income year. If you are lodging the claim for 2016/17 tax year, it is then that the 43.5% or the 38.5%, refundable and non-refundable offsets, respectively, becomes applicable for your expenditure refund.
While the R&D community continually looks at avenues for technological advancement; a review process for the tax incentive is taking place. This aims to increase the effectiveness and integrity of the R&D Tax Incentive. Measures are expected to include a sharpened focus on encouraging additional R&D spending. There are quite a few recommendations discussed and brought up by the independent review and we are anxious to hear the federal government’s response scheduled to be released in Q1 2017. Submissions made throughout the consultation period have been published on AusIndustry’s website.
For more information on the R&D Tax Incentive, other grants, or to see how the recent changes will impact your claim, please get in touch.