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Irish businesses are now eligible to claim a 43.5% cash rebate for R&D costs incurred in Australia in Ireland
The 43.5 cent ‘cash back’ benefit is now available to some companies incorporated in the United Kingdom and Ireland and who undertake R&D in Australia
Who is eligible?
Irish entities may be eligible where they have setup:
- an Australian resident company;
- a corporation that is an Australian resident for taxation purposes; or
- a permanent establishment in Australia.
What’s it worth?
The following table provides a more specific overview:
| Condition | Requirement |
| Group Turnover | All companies in group collectively have a turnover less than AU$20 Million |
| Tax Position | Australian Company is in Tax Loss |
| Benefit | 43.5% of costs refunded (i.e. AU$0.435 refund for every dollar spent) |
Example 1:
An Australian subsidiary company, may be eligible for the R&D tax incentive, where:
- the Australian company is wholly owned by its Irish parent company and qualifies as an R&D entity;
- The Irish Company controls the Australian Resident Company;
- The Irish Company, the Australian Company, and any other companies that the two companies are associated with, have a collective aggregated turnover of less than AU$20 million;
- Under an agreement, The Irish Company agrees to undertake R&D activities in its Australian office solely for the benefit of the Australian Company;
- The Australian Company incurs AU$100,000 in R&D expenditure for the 2017 Financial Year;
- The consideration between the Australian and Irish companies is at arm’s length and will be paid even if the R&D is not successful.
| Example 1: | Expenditure |
| Australian Subsidiary Company’s R&D expenditure | $100,000 |
| Australian Subsidiary Company’s R&D Tax Incentive Benefit | $43,500 Cash Refund |
Requirements for setting up an Australian Company
Foreign companies will need to set up an Australian company, and expect the following:
- Costs to setup the company to not exceed AU$1,500 (plus GST) to incorporate an eligible Australian entity in order to claim the R&D Tax incentive.
- Company incorporation within Australia can take between 2-3 days.
- Foreign entities will require the availability of an Australian resident director
- The Australian Financial year runs from 1 July to the 30 June, however foreign entities can submit an application to the ATO for a substitute financial year to align with their parent company’s timeframes.
How do I claim my expenditure?
- Eligible Australian subsidiaries will need to register their activities with AusIndustry not later than 10 months after the Australian company’s year end.
- R&D expenditure is claimed through the lodgement of an R&D Tax Incentive claim as part of their annual income tax return.
If you have a Irish entity (i.e. a business incorporated in the Republic of Ireland) and interested in claiming the R&D Tax Incentive in Australia, contact us to determine your eligibility and discuss your options.
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