Some very positive R&D Tax Incentive news from tonight’s budget to support Australia’s economic recovery.
By large it would seem the government has backed down to cutting funding to the R&D Tax Incentive program, instead opting to use it as a mechanism to spur economic growth and drive R&D investment.
Key points involve increasing the benefit:
· For small companies, those with aggregated annual turnover of less than $20 million, the refundable R&D tax offset is being set at 18.5 percentage points above the claimant’s company tax rate (current is 16 percentage points at maximum), and the $4 million cap on annual cash refunds will not proceed.
· For large companies, an R&D premium (based on R&D expenditure as a proportion of total expenses for the year) will be increased such that the benefit will be:
a. 8.5 percentage points above the claimant’s company tax rate for R&D expenditure between 0 percent and 2 percent R&D intensity
b. 16.5 percentage points above the claimant’s company tax rate for R&D expenditure above 2 percent R&D intensity
The government will defer the start date so that all changes to the program apply to income years starting on or after 1 July 2021, to provide businesses with greater certainty as they navigate the economic impacts of the COVID-19 pandemic.
Whilst we very much welcome the changes, program regulation may continue to pose uncertainty in areas such as companies keeping ‘adequate’ records.
More details to follow.