2018 Budget — R&D Tax concession
The Australian Government will amend the research and development (R&D) tax incentive to better target the program and improve its integrity and fiscal affordability in response to the recommendations of the 2016 Review of the Research & Development Tax Incentive.
The changes will apply for income years starting on or after 1 July 2018. For companies with aggregated annual turnover of $20 million or more, the Government will introduce a research and development premium that ties the rates of the non-refundable research and development tax offset to the incremental intensity of research and development expenditure as a proportion of total expenditure for the year.
The marginal research and development premium will be the claimant’s company tax rate plus:
■. 4 percentage points for research and development expenditure between 0 per cent to 2 per cent R&D intensity;
■. 6.5 percentage points for research and development expenditure above 2 per cent to 5 per cent R&D intensity;
■. 9 percentage points for research and development expenditure above 5 per cent to 10 per cent R&D intensity; and
■. 12.5 percentage points for research and development expenditure above 10 per cent R&D intensity.
The R&D expenditure threshold — the maximum amount of research and development expenditure eligible for concessional research and development tax offsets, will be increased from $100 million to $150 million per annum. For companies with aggregated annual turnover below $20 million, the refundable research and development offset will be a premium of 13.5 percentage points above a claimant’s company tax rate. Cash refunds from the refundable research and development tax offset will be capped at $4 million per annum.
Research and development tax offsets that cannot be refunded will be carried forward as non-refundable tax offsets to future income years. Refundable research and development tax offsets from research and development expenditure on clinical trials will not count towards the cap. The Government will further improve the integrity of the research and development program by implementing stronger compliance and administrative improvements. These improvements include increased resourcing for the Australian Taxation Office (ATO) and Department of Industry, Innovation and Science, which will be used to undertake greater enforcement activity and provide improved program guidance to participants.
Other changes include improving the transparency of the program by enabling the ATO to publicly disclose claimant details and the research and development expenditure they have claimed, limits on time extensions to complete research and development registrations and amendments to technical provisions (such as the feedstock and clawback rules and the general anti-avoidance rules).
The measure is estimated to have a net gain to the budget of $2.4 billion in fiscal balance terms over the forward estimates period. In underlying cash terms, the net gain to the budget is $2.0 billion over the forward estimates period.
Member Engagement —
ADIA provides leadership, strategy, advocacy and support. Our members set our agenda, fund our activities and directly benefit from the results. With respect to the Association's work to ensure that the initiatives within the 2018 Australian Government budget support the dental industry, the team in the ADIA national office receive advice and guidance from members serving on the ADIA-TCPC Trade & Commercial Policy Committee.
Further Information —
To keep up to date with how ADIA is working to ensure that the Australian Government budget supports the dental industry, subscribe to the Twitter feed @AusDental or follow us on Facebook at www.facebook.com/dental.industry. Alternatively, you can contact the Association via email at email@example.com or by telephone on 1300 943 094.
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