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Changes to R&D tax incentives

The R&D Tax Incentive provides a targeted tax offset designed to encourage more companies to engage in research and development in Australia.

For a company with a ‘standard’ income year beginning on 1 July 2011, the first opportunity to register and claim the R&D tax incentive will be from 1 July 2012.

Companies should consider how the new requirements for registration under the R&D tax incentive will impact upon their accounting, information and record keeping systems from 1 July 2011.

The R&D Tax Incentive has two core components:

  • a 45 per cent refundable tax offset (equivalent to a 150 per cent deduction) to eligible entities with an aggregated turnover of less than $20 million per annum
  • a non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) to all other eligible entities.

Rules and provisions were introduced with the R&D tax incentive to:

  • ensure that, despite the repeal of the R&D tax concession provisions, those provisions can still apply to certain things done (for example, expenditure that has been incurred) before they were repealed
  • establish special transitional arrangements to broadly address some situations that extend over income years where the R&D tax concession provisions and the R&D tax incentive provisions apply.

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