R&D Tax Incentive Global Investment...R&D Tax Incentive Benefits available 43.5% refundable tax...
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R&D Tax Incentive Global Investment and Innovation Incentives Look deeper. Seize the opportunity.
Transcript of R&D Tax Incentive Global Investment...R&D Tax Incentive Benefits available 43.5% refundable tax...
R&D Tax IncentiveGlobal Investment and Innovation IncentivesLook deeper. Seize the opportunity.
R&D Tax Incentive
Benefits available43.5% refundable tax offset • Available to companies with an aggregated
turnover of less than $20 million
• Translates to a cash refund of 43.5 cents for every dollar spent on R&D activities in Australia, for companies that have sufficient tax losses
• For companies in a tax paying position, this equates to 13.5 cents for every dollar spent on R&D activities in Australia.
38.5% non refundable tax offset • Available to companies with an aggregated
turnover of $20 million or more
• Provides a reduction in tax liability equivalent to 8.5 cents for every dollar spent on R&D activities in Australia.
An annual expenditure cap of $100 million per claimant applies with effect from 1 July 2014 for 10 years. This effectively reduces the rate of offset available to 30% where annual expenditure on R&D exceeds $100 million.
Eligible R&D activitiesIn broad terms, for a project to be eligible for the R&D Tax Incentive, it must comprise at least one ‘core R&D activity’.
A core R&D activity is an activity that is experimental in nature and:
• Is undertaken for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, processes, products, services, materials or devices)
• Is based on principles of established science and proceeds from hypothesis to experiment, observation and evaluation and leads to logical conclusions
• Whose outcomes cannot be known or determined in advance based on current knowledge, information or experience.
Other activities may be eligible as supporting R&D activities if they are directly related to the core R&D activity.
Eligible R&D expenditureSubject to certain conditions, companies are entitled to claim a broad range of expenses incurred on eligible R&D activities. These include direct R&D costs (such as consumables), salaries, payments to contractors, travel costs and overhead costs.
Additionally, provided certain requirements are satisfied, companies can obtain an advance overseas finding that allows them to claim expenditure on R&D activities undertaken overseas.
Who are we and how can we help?Our Global Investment and Innovation Incentives (Gi3) service line in Australiais part of a global network with over 450dedicated practitioners across the world. Our Australian Gi3 practice includes PhD-qualified scientists, IT professionals, engineers, food scientists, chartered accountants, tax consultantsand lawyers.
Through our team of Gi3 specialists,unique technology solutions forclients, and access to global technicaland scientific leaders, Deloitte is ableto provide a truly differentiated serviceoffering focused on lowering the costof innovation for our clients.
R&D Tax IncentiveThe R&D Tax Incentive is the Federal Government’s primary mechanism to support innovation in Australia, providing significant benefits to both Australian and foreign companies undertaking R&D activities in Australia. The support available under this program, combined with effective planning, can assist companies lower the cost of innovation.
Case studies
Life Sciences Company A US based life science company with a focus on developing drug assets to combat Alzheimer’s disease decides to set up operations in Australia to take advantage of world leading research capabilities, attractive TGA approval processes and Australia’s R&D Tax Incentive regime.
The company engages with an Australian CRO and undertakes a Phase 1 clinical trial across Australia. The R&D Tax Incentive assists this company continue with its pioneering research into a disease that continues to confound medical professionals.
Agricultural Company A large Australian stone fruit producer suffers significant damage to its fruit crop during harvest due to a pest that had previously not been prevalent in Australia. The company engages with agricultural experts in Australia and overseas only to discover there is no approved treatment for the pest in Australia. In addition, while the pest is prevalent in other countries in the Americas, it has traditionally targeted root vegetables and nut crops as opposed to stone fruit.
The company commences trapping activities and the trialling of a number of insecticides under controlled experimental conditions. The purpose of these trails is to determine efficacy of the treatments, the impact of the treatments on fruit and tree health and other fauna important to stone fruit pollination. The R&D Tax Incentive assists this company develop a treatment for this pest which is a material threat to the Australian stone fruit industry.
Software Company Two young software developers and avid video game enthusiasts incorporate a company to undertake a project focused on improving the immersive video game experience. This project involves taking an off the shelf virtual reality technology and developing a module which enables any video game to become a virtual reality experience. The activities undertaken include the development of unique integration and conversion algorithms and a bespoke module that acts as an interface between the
game console and virtual reality technology. The developers hope that if they are able to develop a working prototype, a major technology company will invest in the technology and sell it to customers all around the world. The R&D Tax Incentive is lowering the cost of innovation for this company and assisting the start-up gain access to cash that can be pumped back into the development activities.
38.5% NON-REFUNDABLE OFFSET
43.5% REFUNDABLE OFFSET
R&D SPEND
R&D SPEND R&D SPEND
8.5 cents Net Benefit
- Reduced tax liability (unused offset carried forward)
43.5 cents Benefit
- Cash Refund
13.5 cents Net Benefit
- Reduced tax liability (unused offset refunded)
$20m
Tax Payable PositionTax Loss Position
Global Investment and Innovation Incentives
R&D Benefits
For further information on how we can assist you, please contact:
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About Deloitte
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About Deloitte Australia
In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www.deloitte.com.au.
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Adelaide
Mark ReuterPartner – Global Investment and Innovation IncentivesTel: +61 8 8407 7188 [email protected]
Brisbane
Greg PrattPartner – Global Investment and Innovation IncentivesTel: +61 7 3308 7215 [email protected]
Melbourne
Serg DuchiniPartner – Global Investment and Innovation IncentivesTel: +61 3 9671 7376 [email protected]
Hank SciberrasPartner – Global Investment and Innovation IncentivesTel: +61 3 9671 5305 [email protected]
Perth
Steve AndreazzaPartner – Global Investment and Innovation IncentivesTel: +61 8 9365 7123 [email protected]
John GrohovazPartner – Global Investment and Innovation IncentivesTel: +61 8 9365 7322 [email protected]
Ron van BeekPartner – Global Investment and Innovation IncentivesTel: +61 8 9365 7129 [email protected]
Sydney
Jason DunnachiePartner – Global Investment and Innovation IncentivesTel: +61 2 9322 3678 [email protected]
Todd FieldingPartner – Global Investment and Innovation IncentivesTel: +61 2 9322 7705 [email protected]
Karen SteinPartner – Global Investment and Innovation IncentivesTel: +61 2 9322 7387 [email protected]
Western Sydney
Eamon FenwickPartner – Global Investment and Innovation IncentivesTel: +61 2 9322 7189 [email protected]
