R&D Tax Incentive Software Development Guidance
Companies that operate in the field of Information and Communication Technology (ICT) can take advantage of the R&D Tax Incentive to boost their cash-flow and development capabilities. Depending on the company’s revenue levels, a 40.5% refundable or a 38.5% non-refundable tax offset would apply. The key issue to determine is whether the projects undertaken by the company qualify as eligible R&D activities.
What qualifies as R&D
According to the program rules, core R&D activities are those whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:is based on principles of established science
proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions
conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).
Some activities that do not meet the above criteria can also be claimed if they support core R&D in a direct way
More about R&D
Introduction of the Research and Development Tax Incentive
From the AusIndustry Programs Section: On 24 August 2011, the bills to establish the new R&D Tax Credit were passed by Parliament. The final step in the legislative process is Royal Assent by the Governor-General. On 2 September 2011, Innovation Minister, Senator...
Historical Chronology of R&D
R&D Tax Concession 1986 till 2011 “From 150% down to 125% in benefits; offsets to smaller loss-making companies; additional 175% incremental R&D spend; and the short-lived international premium”. Productivity Commission Report – March 2007 A copy of the report...
R&D ICT Case Studies
AusIndustry, in conjunction with the ATO, has released guidance material for the ICT sector that includes case studies relating to the following type of developments: new algorithm to analyse large data sets; cloud computing in a manufacturing environment; software...
4 Questions to Consider – R&D Tax Incentive
1. Is the corporate structure appropriate? Only incorporated entities are eligible to claim the R&D Tax Incentive. However, if a company is controlled by a non-eligible entity such as a trust, then it will only be able to claim the 38.5% non-refundable tax offset,...
