The Research and Development (R&D) Tax Incentive allows companies to realise tax savings and increase cash flow by offering a financial benefit for undertaking eligible R&D activities. Funding is available in two streams:
- A refundable tax offset (cash refund) at 43.5% per $1 spent on eligible R&D for companies with less than $20 million in aggregated turnover
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A non-refundable tax offset at 8.5% per $1 spent on eligible R&D for companies with $20 million or more in aggregated turnover.
With an additional $2 billion allocated to the program from the Federal Government’s 2020-21 Budget, the financial benefit available to companies under both streams will increase from 30 July 2021 onwards.
What are eligible R&D activities?
Agribusiness activities are assessed under the R&D Tax Incentive using the same criteria as other industries. Eligible R&D activities are those that meet the following criteria:
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Experimentation derived from hypothesis
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Conducted via a systematic progression of work
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Undertaken for the purpose of generating new knowledge
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Where the outcome of experimentation could not be known in advance on the basis of existing, publicly available information.
The following R&D activities can be commonly eligible for companies in agribusiness:
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Developing or improving new technologies (e.g. harvesting and processing methods)
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Developing novel feeding methods and/or feed compositions to increase growth, improve FCR or reduce mortality rates
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Genetics trials
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Developing methods to prevent/eradicate disease and biosecurity issues in crops or livestock.
What types of costs are eligible?
Certain costs can be claimed for eligible R&D activities, including:
Where to from here?
To access the R&D Tax Incentive, a company must register its R&D activities with AusIndustry no later than 10 months after the end of its relevant financial year. It is also important to keep accurate records of eligible R&D activities for substantiation purposes.
Our tax experts can help you evaluate the potential financial benefit available to your company under the R&D Tax Incentive, and how to meet the eligibility requirements.