The 43.5 cent ‘cash back’ benefit is now available to some companies incorporated in the United States and Canada and who undertake R&D in Australia.
Who is eligible?
U.S and Canadian entities may be eligible where they have setup:
Under the new R&D tax incentive, the Refundable limb of the Incentive operates as a 43.5%
Offset for companies with turnover < $20M (or a 38.5% non-refundable offset if turnover exceeds
$20M). The mechanics of the offset apply whereby a company forfeits their Income Tax deduction
for eligible R&D Costs and claims the 43.5/38.5% credit in exchange. This allows companies to bring
forward any tax losses and “cash out” the losses to the extent of eligible R&D in a claim year.
The following calculator may assist a potential R&D tax claimant to derive their draft benefit.
Do you have tax losses?
Are your carry forward tax losses greater than your R&D spend?
Is your group agregated turnover under AU$20 million?
Total Company Expenses
Eligible R&D Expenses within Total Company Expenses
Opening Balance of Tax Losses
|Prima Facie Taxable Income (Pre R&D/Application of Tax Losses)|
|Add R&D Expenditure Forfeited as deduction/Claimed as Offset|
|Less Tax Losses Applied to Current Year Income|
|Revised Taxable Income|
|Tax Payable on Above (30%)|
|Credit for R&D Tax Offset|
|Net Tax Payable/(R&D Offset Refundable)|
|Closing Balance of Tax Losses|
What’s it worth?
The following table provides a more specific overview:
|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 cents in the dollar refund|
An Australian subsidiary company, may be eligible for the R&D tax incentive, where:
|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:
How do I claim my expenditure?
If you have a U.S entity and are interested in claiming the R&D Tax Incentive in Australia, contact us to determine your eligibility and discuss your options.