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Federal Budget 2020-2021 (R&D Tax Incentive Updates)
The Australian government will provide a total of AU$2 billion boost over the next three years to help businesses that invest in the Research and Development Tax Incentive (RDTI). This positive change provides a greater R&D investment and rewards large companies with higher R&D intensity.
The following changes will apply from 1 July 2021:
- For small companies with an annual aggregated turnover of less than AU$20 million, the refundable R&D tax offset is set at 18.5% above a company’s tax rate, and thus increasing the tax benefit for tax paying companies. No cap on cash refunds.
- For large companies with an annual aggregated turnover of more than AU$20 million, the streamlined two-tiered intensity test will apply, as follows:
- 8.5% benefit for R&D expenditure between 0 and 2% R&D intensity
- 16.5% benefit for R&D expenditure with >2% R&D intensity
- AU$4 million cap on annual cash refunds will be canned.
- The cap on claimable R&D expenditure is increased from the current value of $100 million to $150 million per year.
This is a positive change that provides a greater opportunity for R&D investment and rewards large companies with higher R&D intensity.
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