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The Research and Incentive Tax

The Research and Incentive Tax – or also known as the R&D Tax Incentive – is a program that helps cover expenses created by businesses and establishments concerning eligible development and research for which could either be refundable or non-refundable depending on the offset’s company. This tactic was administered by the country’s Department of Industry to enhance and increase the economy.

The Scheme

Generally, the R&D tax incentive in Australia focuses on encouraging institutions to invest in the country’s research and development. Since R&D is a critical step in innovation, this drives the improvements in technology which eventually leads to improvements in productivity and the increase of economic growth.

However, most companies commonly tend to under invest in the said necessities for the following reasons:

Difficulties in finding the finances of external because of the uncertainties of the planned success of such projects.

Not capturing their benefits because of the new knowledge of possible leaks to benefit other businesses and competitors.

For these reasons, the government has decided to take the role of encouraging the industry to allot more investment in research and development. This program offers a way for institutions to effectively invests in such necessities while alleviating their primal reasons for not investing.

The Eligibility

Although all businesses can apply for the program, not all of them can be accepted. In particular, only those eligible companies – the companies that are incorporated under the law , incorporated under the foreign law and a legal resident of the country, and incorporated under the foreign law but are resides to make incomes – can be provided with benefits.

Specifically, the companies with no less than $20 million for turnover can only receive a refundable tax offset; this allows the benefit to be repaid through the refund of cash for cases where the business faces a tax loss. However, other eligible companies can receive a tax offset that is non-refundable to reduce their tax.

The Administration

The two main institutions that are responsible for the program are the Australian Taxation Office, or the ATO, and the Innovation and Science Australia, or the ISA. For their roles, the ATO manages the regulations that are administered for the eligible costs and entities and the ISA are the one who registers the activities related to research and development. The reports of each administration are passed regularly during each year to monitor the impact of innovation and the program’s budget.

The Application

As being said, the R&D tax incentive can only be administered to eligible companies; this means that not all applicants are provided with help. And for those who comprise the criteria, they can claim their tax offset by primarily registering their activities related to research and development. Owners and managers must register the income year that decided to claim separately. Right now, these individuals can simply download the form online and provide all the necessary details.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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