The R&D Tax Incentive remains Australia’s primary program for supporting businesses undertaking R&D activities with an estimated $3.2 billion annual investment. The program uses a $20 million annual turnover threshold to determine a company’s R&D tax rebate, a threshold that has been unchanged since 2011. In our view, it is time to review this arbitrary line in the sand and ensure the R&DTI aligns with other SME policies so that highly innovative medium sized businesses are incentivised to continue their R&D investment as they grow.

The end of the financial year brings with it some important considerations if you’re planning to lodge an FY24 R&D Tax Incentive claim. We’ve summarised some key things you need to be across.

In its latest R&D Tax Incentive decision (GQHC v Commissioner of Taxation [2024] AATA 409) , the Administrative Appeals Tribunal (AAT) affirmed the position that the ATO has the power to assess and determine the eligibility of R&D activities per the legislative requirements.

Companies preparing R&D Tax Incentive claims need to be aware of rules that prevent “double-dipping” when they have received grants or other recoupments for the R&D activities being claimed.

An AAT decision handed down in December 2023 found activities relating to the development of a customised basketball shoe to suit the requirements of an Australian professional basketball player were neither core nor supporting activities, within the meaning of the relevant legal provisions.

The ATO is set to publish detailed information on R&D tax incentive claims submitted by R&D entities. The initiative aims to enhance transparency, shed light on the benefits derived by companies, and encourage voluntary compliance with the R&D program.

The ATO has a special gift for R&D tax claimants this season – two new Taxpayer Alerts as a reminder to ensure compliance with some of the more complex areas of the program.

The R&D Tax Incentive program is broad based and covers a diverse range of industries and experimental work. But there is a selection of activities that are excluded from being registered as core R&D activities under the program.

Can I claim my patent costs as R&D expenditure?

Public spending on the non-refundable stream of the R&D tax program has decreased significantly over the past 10 years. What explanations can be offered for this decrease and is it something we should worry about?

Our R&D Tax Facts quarterly program update reviews some of the recent developments in the world of the R&D Tax Incentive (R&DTI) program.