The budget bill has now received Royal Assent and will be in effect from 1 July 2021. In the interim the R&DTI remains unchanged for 2019-2020 registrations, although the company tax rate reductions vary based on a company’s annual turnover and the permanent tax, or net benefit will vary for companies with an annual group turnover of between $20 million and $50 million.
Other changes to the RDTI include the consolidation of the rules for the clawback of R&D recoupments and feedstock adjustments where an R&D entity must now purge the entire benefit of an R&D tax offset to the extent it receives a recoupment amount, feedstock adjustment or assessable balancing adjustment because of the offset. Additionally, the operation of the general anti-avoidance provisions in Part IVA will now be applied to schemes involving R&D tax offsets.
COVID has seen many historically profitable businesses dip into losses who could now benefit from cash refunds from the R&DTI. Additionally, businesses that have historically exceeded the $20 million refundable offset cap might now, as a result of COVID-19 downturns, potentially fall under the $20 million turnover cap and have tax losses that could be the subject of potential R&D refunds.
Importantly, and regardless of the generosity in these changes, all RDTI registrants need to be mindful of the R&DTI regulators’ ongoing emphasis on record keeping practices of claimants that seek to substantiate how they self-assessed their eligibility with the program.
If you have any questions as to how the Australian federal budget impacts your business and your R&D claims, please contact your local Bentleys R&D tax expert. We are here to help you access your entitled incentives, and to help you get where you want to be.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.