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Draft Legislation Released for R&D Tax Incentive

The Government announced on 8 May 2018 that the Research and Development Tax Incentive (R&DTI) would be reformed and that changes would apply from 1 July 2018.

Draft legislation has been released regarding amendments to the R&DTI. Stakeholder feedback is encouraged and responses can be submitted until 26 July 2018.

Changes to the Bill include:

• Increasing the R&D expenditure threshold from $100 to $150 million;
• Introducing a $4 million cap on annual cash refunds (the cap excludes clinical trials). Refunds over this amount may be carried forward into future years as a non-refundable offset;
• Companies with an annual turnover over $20 million will be entitled to an increased R&D tax offset rate equal to their corporate tax rate plus a premium based on R&D intensity;
• Companies with an annual turnover below $20 million will be able to receive an R&D tax offset rate equal to their corporate tax rate plus a 13.5 percent premium;
• Changes to the application of feedstock and clawback adjustments.