The Research and Development tax incentive is the government's principal mechanism for encouraging Australian industry investment in research and development.
The Australian Taxation Office (ATO) and Industry Innovation and Science Australia (IISA) are jointly responsible for the administration of tax incentives.
To be eligible for a tax offset your notional deductions for an income year, must be at least $20,000. If your eligible R&D expenditure is less than $20,000, you can still apply for the offset.
The Australian R&D Tax Incentive Program supports R&D activities that can be shown to follow a set of specific tasks.
Sub-contracted R&D, software, prototyping, testing and independent research costs may all qualify for R&D relief. Capital expenditure, expenditure on distribution and production of goods or services is not eligible.
The Research and Development tax incentive offers a tax exemption of between 18.5% and 43.5% for most companies. Incentives are given based on your company's revenue and profitability.