R&D Tax Credit Fact Sheet 

KEY POINTS

• A new R&D Tax Credit was announced in the 2009-10 Budget which will replace the current R&D Tax Concession.  The new R&D Tax Credit will commence from the 2010-11 income year.
• This significant reform delivers the main elements of the recommendations of the Review of the National Innovation System on tax support arrangements for research and development.
• The new R&D tax incentive will have two components:
• A 45 per cent refundable tax credit (equivalent to a 150 per cent concession) will be available to firms with a turnover of less than $20 million per annum.
• A 40 per cent tax credit (equivalent to a 133 per cent concession) will be available to firms with a turnover of $20 million or more per annum.
• The new R&D Tax credit is a broad-based and market-driven package. It will increase the base rate of government assistance for R&D conducted by business.
• The complex R&D Tax Concession Premium and International Premium will be removed and definitions of eligible R&D reviewed to provide better targeted support.
• The new measure is simple, predictable and adopts the international practice of using a well-understood tax credit to support business R&D.
• As an interim measure prior to the commencement of the R&D Tax Credit, the R&D expenditure cap for the R&D Tax Offset has been lifted from $1 million to $2 million for 2009-10, providing a tangible demonstration of increased Government support for R&D by small companies.
• The consultation paper The New Research and Development Tax Incentive, was released on 18 September 2009.  Industry consultations were held in Australian capital cities in September and October 2009. Written submissions closed on 26 October 2009, with 197 submissions received from a variety of stakeholders.
• Exposure draft legislation and explanatory materials for the new R&D tax incentive were released for public comment on 18 December 2009. 
• This followed on from the first stage industry consultation in September and October 2009.
• Submissions on draft legislation closeed on 5 February 2010, with 125  submissions received.
• The Government has consulted with industry and other stakeholders on the draft legislation and is in the process of refining its position on the final design of the new R&D Tax Credit. Draft legislation is scheduled for introduction into the Parliament in the Autumn 2010 sittings.

FACTS AND FIGURES

• The R&D Tax Concession is currently accessed by around 8,000 firms of all sizes from all sectors.  These firms are expected to access the new R&D Tax Credit and this will mean that the R&D Tax Credit will have the greatest reach of any Australian business innovation program.
• Over 5,500 small firms stand to benefit from the refundable 45 per cent credit.
• Larger firms will benefit from the certainty of a flat rate of 40 per cent.
• The R&D Tax Credit will come into effect in the 2010-11 income year and will deliver over $1.4 billion of benefit annually.