
Nicola Purser
The Research and Development (R&D) Tax Incentive is a significant driver of innovation in Australia. It encourages companies to undertake R&D activities they might not otherwise be able to fund, but many companies find accessing tax incentives difficult and time consuming. Without someone to guide them through the process, some choose not to take this major step forward.
Our team of specialists understand the Australian tax incentive system and have extensive experience in successfully preparing applications and obtaining R&D benefits. This can be for both activities undertaken to acquire new knowledge, and information in relation to new or improved materials, products, devices, processes or services. BDO also advise on various grants programs funded by the Commonwealth and State governments — another major source of funding for R&D in Australia.
BDO's R&D tax specialists have extensive experience in successfully preparing applications and obtaining research and development benefits.
BDO can help you access research and development tax incentives by:
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For financial years starting after 1 July 2021:
BDO’s R&D taxation specialists provide various compliance and consulting services to support R&D activities and R&D claims. We can:
Our specialist R&D team proudly support more than 500 of approximately 13,000 R&D claims made in Australia and are backed by our global team across key jurisdictions.
We are strongly connected with Australia’s R&D infrastructure due to our regular interactions with leaders from AusIndustry and the ATO.
Our clients operate within the technology, engineering, manufacturing, resource and energy, biotechnology and agriculture industries, ranging from start-ups to large multi-national organisations.
If you are navigating the R&D Tax Incentive for the first time, our team of experts can assist you in preparing your R&D claim in alignment with the legislation and regulatory requirements whilst maximising the benefits you receive.
Here are a few common questions that you may have:
If you are an eligible R&D entity, to access the R&D tax offset, you’ll need to:
You qualify as an R&D entity if you're a corporation that is:
No, the R&D tax offset is calculated based upon the R&D expenditure incurred on the R&D activities in the income year, irrespective of whether the company has income or whether the R&D activity is ongoing or completed. Those entities that qualify for the refundable tax offset and have no or little income tax to pay can receive the offset as a cash refund. The refundable tax offset is applied to any income tax liabilities before being paid as cash.
These are experimental activities designed to generate new knowledge. To be eligible, they must:
Some activities are specifically excluded from this category, such as the reproduction of a commercial product or process (where that knowledge is publicly available).
These are activities that directly support your core R&D activity. In some cases, they must meet a dominant purpose test, meaning they’re primarily undertaken to support core R&D.
This applies especially to activities that:
There are certain ‘clawback’ provisions to ensure R&D entities are not ‘double dipping’. However, the extent of this clawback is dependent on the facts, and as the clawback is delivered as assessable income, the R&D expenditure incurred on these grants and outputs may still be beneficial in some circumstances.
The R&D tax offset is calculated based upon the amounts ‘incurred’ by the R&D entity in the income year. Furthermore, amounts incurred to ‘associates’ of the R&D entity (such as the owners) must be paid in the income year to be eligible. There is an expectation that contemporaneous documentation exists to support the amounts attributed to the R&D activities (invoices, timesheets etc.).
If you have any further questions around R&D eligibility for your organisation, contact our R&D and Government Incentives team to discuss.See how the Australian R&D Tax Incentive compares to R&D incentive programs in other jurisdictions using the BDO Global interactive tool.
Contact us
Contact our team to discuss your needs using the request for service form.
Alternatively, call 1300 138 991 to speak with an adviser in your nearest BDO office.
Nicola Purser