Start-ups encouraged to get in quick for R&D tax incentive

Start-ups can now apply for registration of research and development activities for the R&D Tax Incentive, which replaces the R&D Tax Concession for all income years commencing on or after July 1, 2011.

AusIndustry has confirmed the R&D Tax Incentive application form for registration is now available. Registration takes place on an annual basis after activities have been undertaken.

Companies must be registered with AusIndustry before they are able to claim the R&D Tax Incentive in their annual income tax return.

An application for registration is due within 10 months after the end of the company’s income year in which eligible activities were conducted.

The R&D Tax Incentive is an attempt by the Federal Government to encourage industry investment in R&D.

The two components of the program are:

• A refundable 45% tax offset for eligible companies with an aggregated turnover of less than $20 million per annum.
• A non-refundable 40% tax offset for all other eligible companies.

According to Senator Kate Lundy, Minister Assisting for Industry and Innovation, the new R&D Tax Incentive represents the biggest reform to business innovation support in more than a decade.

For SMEs with annual turnover of less than $20 million, the rate of support above the normal tax deduction has doubled from 7.5 cents in the dollar to 15 cents in the dollar. This is a total tax offset of 45 cents in the dollar.

“This is particularly helpful for small and medium-sized businesses seeking to improve their productivity through innovation,” Senator Lundy said in a statement earlier this year.

It’s estimated more than 8,000 businesses will access the R&D Tax Incentive, administered by AusIndustry on behalf of Innovation Australia, and the Australian Taxation Office.

Innovation Australia and AusIndustry are responsible for registration of activities, and for determining whether activities are eligible.

The ATO is responsible for determining the eligibility of whether you can apply, and of expenditure incurred and claimed under the program.

The incentive operates on a self-assessment basis. Claimants are responsible for ensuring they meet the eligibility criteria of the program to registered R&D activities and related expenditure.

Registration of activities does not, by itself, indicate that the activities are eligible, or that they comply with other provisions of the relevant legislation. Registration applications are reviewed by AusIndustry, which checks whether the application is within the statutory deadlines. It is important that companies provide relevant and accurate information in their registration application.

This information may be used for AusIndustry’s compliance review activities, and identifying trends that provide a basis for education and compliance review activities.

In the majority of cases, AusIndustry accepts the accuracy of the information provided in the application form and registers the activities.

AusIndustry may choose to examine activities registered at a later stage, and make a finding on the eligibility of some or all of the activities detailed in the application.

Companies will be contacted to discuss their registered activities where they are subject to this examination.

This article first appeared on StartupSmart.