Is your business missing out on valuable tax benefits? Many Australian companies qualify for the R&D Tax Incentive but don’t know. With the 30 April 2025 deadline for registering R&D activities under Australia’s R&D Tax Incentive program coming soon, businesses must understand the steps involved. With this detailed guide, you will learn every important step along the way, with assistance to ensure your business gets the most out of this valuable program.
Step 1: Check Eligibility—Are You Ready to Apply?
Before you start the registration, you must confirm that your business meets the eligibility rules for the R&D Tax Incentive.
- Company Structure: Generally, incorporated companies in Australia (both Proprietary Limited (Pty Ltd) and Public Companies (Ltd)) qualify. Some overseas companies with R&D in Australia may also be eligible if considered an “Australian resident for tax purposes.” Trusts and partnerships are usually not eligible. It’s best to check with a tax professional to be sure.
- Expenditure: You must have spent at least $20,000 on eligible R&D activities during the income year. Eligible expenses include:
- Salaries and wages of R&D staff directly involved in eligible R&D activities.
- Cost of materials used in the R&D.
- Depreciation of equipment used mainly for R&D.
- Payments to contractors for R&D (must be at arm’s length).
- Overheads directly related to R&D (e.g., rent for a dedicated R&D lab).
- Ineligible expenses include:
- Marketing and advertising costs.
- Legal fees (unless directly related to R&D, such as patent applications).
- Interest expenses.
- General business administration costs.
- R&D Activities: Your activities must be either core or supporting R&D.
- Core R&D Activities: These are experimental activities that generate new knowledge or create new or improved products, processes, services, or methods. They must be experimental and follow a systematic series of experiments or trials.
- Supporting R&D Activities: These are activities directly related to and needed for the core R&D. They include literature reviews, data collection, and prototype development.
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