New R&D Tax Credit to Commence on 1 July 2011

The Federal Government has just announced crossbench support for the new R&D Tax Credit Program.

The new R&D Tax Credit will replace the R&D Tax Concession and provides eligible companies with a tax offset for expenditure on eligible R&D activities, announced Kim Carr, Minister for Innovation, Industry, Science and Research (pictured alongside).

The two components of the program are:
* a 45 per cent refundable tax offset (equivalent to a 150 per cent concession) for eligible entities with a turnover of less than $20 million per annum
* a non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) for all other eligible entities.

The $1.8 billion R&D Tax Credit is expected to deliver more funding to innovative firms – including manufacturers, ICT and biotech. The policy change is expected to benefit businesses that innovate and use R&D as a platform for future growth.

The Government will introduce quarterly payments for small and medium businesses from 1 January 2014. These firms will get their credit sooner, significantly improving their cash flow and incentive to invest in R&D.

The deferral of the start date to 1 July 2011 has an overall impact of $40 million, with a negative impact of $310 million in 2011-12 and a positive impact in 2012-13 of $270 million.

Over the next 12 months AusIndustry will work with its customers to explain the features of the new program. Together with the ATO, AusIndustry will progressively release a range of guidance materials to support customer education.

This material will include a program overview and a suite of information sheets covering key aspects of the program such as the definition of R&D activities, advance findings, registration, overseas research and development, record-keeping and research service providers.

Information sessions will be held across the country. Support through the AusIndustry Hotline, and AusIndustry’s State and Territory Offices and Regional Managers will also be available.

To keep up to date with developments in the R&D Tax Credit and R&D Tax Concession programs customers may subscribe to AusIndustry’s free email updates. You will receive an email notification when new information is added or existing information is changed.

 More information from AusIndustry.

[Kim Carr’s photo courtesy: www.photocall.com.au]