R&D Tax Incentive - Common Questions

Common R&D Tax Incentive Questions

With the R&D Tax Incentive deadline fast approaching, here is a quick breakdown of the common questions that the team at Rimon are constantly asked:

1.    What is considered R&D?

2.    What is the process from start to finish?

3.    Can I claim salaries?

4.    Are overseas developers claimable?

5.    Can I claim Rent and Utilities?

What is Considered R&D?

R&D is based on people having innovative ideas that lead them on a process of experimentation and uncertainty, resulting in the development of a unique product or service. This often requires an identification of the new knowledge that is being generated by the R&D activity.

What is the process from start to finish?

In order to complete the R&D application, there are two necessary ingredients:

1.    Technical Report that details the R&D activities

2.    Breakdown of all the R&D expenses

This information is submitted to AusIndustry, who subsequently provide a registration number after 7-10 working days. Once this is received, a R&D Tax Schedule is prepared to be filed with your tax return. After approximately 4-6 weeks, the applicant will either receive their cash back benefit (if the company made a loss) or tax saving (if the company made a profit).

Can I claim salaries?

Salary amounts for all staff members involved in the R&D process are claimable. For example, if the CEO spends 10% of his time on R&D management and gets paid $100,000 per annum, the claimable amount is $10,000. The same logic applies for all tech developers, R&D administrators and those involved in the experimentation process.

Are overseas developers claimable?

All payments to developers that work in Australia are claimable. However, if the developer is located overseas, these payments are not claimable. Nevertheless, if the resources for the activity are located overseas, it is possible to undertake an overseas finding.

Can I claim rent and utilities?

Additional eligible expenses are claimable on the condition that they were involved in the R&D process. For example, rent and utilities are claimable as they are required to undertake the R&D activities. These expenses are ultimately apportioned based on salary amounts.

Other overheads may be eligible and this is assessed on a case by case basis.

Steps to Take

Its important to move quickly with your application with the April deadline.

Make sure that you give Rimon Advisory a call today at 9696 1256 to discuss if you are eligible.