The latest R&D tax incentive updates

The Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020 was introduced into parliament and enacted on 14 October 2020. This means that the changes to the R&D tax incentive in the Federal Budget will become effective from 1 July 2021.

Prior to the Federal Budget, a number of cuts to the R&D tax incentive were proposed. However, following the budget, not only were the initial proposals were scrapped, but additional funding to R&D has been allocated, which is exciting.

Our Carbon R&D and Grants experts have been monitoring the updates closely, and are eager to share an update with you.
‘R&D uplift’

From 1 July 2021, eligible businesses will receive an ‘R&D uplift’ at a fixed percentage above the entities’ company tax rate.

The R&D uplift percentage will be:

For entities with aggregated turnover of less than $20 million: 18.5%
For entities with aggregated turnover above $20 million: The rate will now be either 8.5% or 16.5%
- This will be depending on the businesses ‘R&D intensity’. R&D intensity will be calculated at two tiers:
- Either 0-2% or above 2%, calculated as a portion of R&D expenses over total company expenses.