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Budget 2018

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Another budget brings another proposed overhaul to the R&D Tax Incentive. While the status quo is being maintained for the 2018 financial year, a raft of changes are being introduced as part of the budget in an effort by the federal government to curtail the rapidly growing cost of the program.

The proposed changes are driven by three primary policy objectives:

  • Improved integrity of the R&D program and associated compliance by AusIndustry/ATO
  • Increased focus on the proportion of R&D expenditure incurred by larger companies
  • Continued support for startups and early stage development

Should the changes successfully pass through the Senate from 1 July 2018 companies seeking to claim the R&D Tax Incentive will be subject to the following:

  • Companies with an annual turnover of less than $20 million will receive a refundable R&D offset of 41%, capped at $4 million each year
  • Companies with turnover greater than $20 million will be subject to an ‘R&D Intensity’ test based on the portion of R&D expenditure as a proportion of the company’s total expenditure
  • Depending on the level of intensity and company tax rate, companies with turnover greater than $20 million will receive a non-refundable offset between 31.5% and 42.5% (greater the intensity, the higher the rate)
  • Annual threshold on R&D expenditure eligible for a tax offset to be raised from $100 million to $150 million.
  • Stronger compliance and administrative improvements to be implemented to improve the integrity of the program
  • Increased funding for “enforcement activity” by the ATO and AusIndustry
  • Increased transparency by enabling the ATO to publicly disclose claimant details and the R&D expenditure they have claimed

Please note that at present there are no expected changes for applications lodged relating to the financial year ended 30 June 2018. However, given the indication of increased compliance it is recommended that businesses place greater focus on having and maintaining sufficient supporting documentation for substantiation purposes.

The experienced team at RADBE Consulting are on hand to provide advice, assist with application preparation and ensure our clients get all that they deserve. Please contact us on (07) 3216 6242 or for additional information on this grant as well as others your business may be eligible for.


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