Research and Development R&D Tax Offset Claims

Businesses both small and large have been able to claim some tax benefits from their research and development activities for years. The government wants to foster innovation and is sometimes happy to pay for it.

However, in the past the range of tax benefits was limited. Previously a business could only claim some extra deductions against their taxable income. This was OK for some companies making money, but for many innovative start-up companies involved only in R&D activities, it was useless. They were burning cash and didn’t pay tax so there was no immediate use for any tax deductions.

That has now changed.

All except the largest business now have the option of cashing in their R&D spend. At tax time they can try to claim back a portion of the R&D as a tax refund. The catch is there are many more hoops to jump though to prove your R&D spend, but if you can navigate through that, it is a much better outcome for the smaller end of the market.

Before embarking on an R&D program you should know it is much harder to claim that might you think. Specialists in the field are paid a lot of money to advise businesses on their R&D plans and submissions. It really does need a lot of work and it seems like the thing being development must be close to revolutionary to qualify! If you are considering making an R&D tax offset claim, in our experience it’s probably best to try only if you have a very large R&D project.

There are, of course, many conditions and thresholds for different types of businesses. But suffice to say that the possible tax benefits now seem quite a bit better than before and it’s a step in the right direction.

If you require assistance with your tax situation please contact us.

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