Friday 26 August 2011
New R&D tax incentive program gives rise to new opportunities
On Wednesday 24 August 2011, Federal Parliament passed the Tax Laws Amendment (Research and Development) Bill 2010 and the Income Tax Rates Amendment (Research and Development) Bill 2010.
What does this mean for you?
The tax incentive program gives rise to new opportunities, including:
- Potential cash savings of up to 15c for every $1 spent on eligible R&D activities
- Relaxation of the IP rules - greater opportunity to claim
- An increased ability to claim overseas R&D, and
- The opportunity to apply for a Private Binding Ruling on R&D activities.
What do you need to do?
As the law has now passed through Parliament and applies from 1 July 2011, it is timely for current claimants to:
- Proactively review current R&D claims in light of the different eligibility criteria, and particularly the new definition of eligible R&D
- Determine what additional documentation will be required to substantiate claims under the new program
- Establish revised processes to capture R&D information in a contemporaneous manner, and
- Consider the additional requirements set out in the legislation (e.g. the required delineation between core and supporting activities and their relevant costs).
If you do not currently have a claim you should consider whether:
- You meet the new definitional requirements of the new program
- Your company performs R&D in Australia on behalf of a foreign entity (i.e. IP is held offshore)
- You may undertake R&D overseas, and
- To make an R&D claim in light of the increased benefit.
Further information can be found on the PwC website, details of which can be found here.
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