Skip to main content
Tax Offset

The Research and Development Tax Incentive – 2023 Overview

By June 8, 2023September 25th, 2023No Comments
Research and Development Tax Incentive

R&DTI – What is it about?

The Research and Development Tax Incentive (R&DTI) offers companies offsetting eligible R&D activities costs. It was developed to encourage companies to innovate and grow, benefiting the Australian economy.

Who can claim R&DTI?

The R&D Tax Incentive is only available to companies incorporated in Australia. Companies also need to be registered with AusIndustry within 10 months of the end of financial year. Trusts and Trustee companies are not eligible.

What is the benefit of the Research and Development Tax Incentive?

For companies with a group turnover of less than $20m, the rate is 18.5% above the company tax rate. This amount is refundable for companies in losses or offset against tax liability.

For large companies with a turnover of >$20m, the rate depends on the intensity of the R&D in a company as a measure of total operating expenditure. Increasing rates of R&D attracts and increased rate of offset.

What are eligible activities for R&DTI?

Core R&D activities are defined as:

Experimental activities – whose outcome cannot be determined in advance, based on principles of established science proceeding from hypothesis to experimentation, evaluation and logical conclusion and conducted for the purpose of generating new knowledge including new or improved products, processes, materials, devices or services;

Supporting R&D activities are directly related to Core R&D activities – directly related activities have a direct, close and relatively immediate relationship with the experimental activities, supporting activities are not experimental but are necessary for undertaking the project/activity e.g. travel to a conference, background research, regular tests, discussions with suppliers and Dominant Purpose test applies for activities that produce goods or services or activities on the ‘R&D excluded’ list.

How to apply for R&DTI?

Application can only be submitted through the R&DTI Customer Portal. To access the portal, the applicant needs to have a myGovID account and link to the company’s ABN using the ATO’s Relationship Authorisation Manager.

If you have questions

If you need a professional support with your R&DTI, you can book your consultation with BTMH. Remember that for your income year ended 30 June 2022, the deadline to submit your Research and Development Tax Incentive (R&DTI) application for the 2021-2022 financial year passed on 2 May 2023. For the next year, be prepared to submit your application in analogous period. Follow ATO updates and our blog to make sure when is the next deadline.