The R&D Tax Concession is a broad based government incentive that provides a tax benefit to Australian registered companies that invest in research and development. The definition of research and development for the purposes of the concession is very broad. In its most basic form, any Australian registered company that undertakes new product or process developments is eligible to claim the concession if these developments contain a level of innovation and/or high level technical risk. Evidence that a company may undertake innovative activity can be evidenced by such things as patent applications.
In its most pure form, the current R&D Concession provides a company an additional deduction off its taxable income. Where most business deductions are deducted at a rate of 100%, R&D expenditure is deducted at a rate of 125%, leading to tax savings of 7.5c per dollar invested. Through our work with a diverse range of innovators, we would be able to quickly ascertain levels of R&D investment. Types of R&D expenditure we look to claim include all direct costs, staff time (labour) and associated overheads. Trial time will also significantly, and legitimately, increase the quantum of R&D spend. Where a company is in a tax-loss position, it is eligible to ‘cash out’ its R&D benefit. This offset provides businesses with a cash rebate of 37.5% of R&D investment for a given financial year.
From time to time, the Attorneys at FB Rice work with other leading professional services firms to provide our clients with expert advice in areas of relevance to their intellectual property management. Recently, Hugo De Jong, a Senior Analyst with Deloitte provided FB Rice with information on R&D Tax concessions, an area relevant to IP management.
If you would like any further information in this area, please contact Brett Lunn, Managing Partner or your FB Rice Attorney and we will put you in contact with the relevant Deloitte expert in the area.