A significant benefit of the new R&D incentive is that applicants can obtain an advance finding of whether their activities are eligible R&D activities. This is important as it provides some comfort in respect to whether they will benefit from the incentive.
The Application for Advance Findings form, which determines whether activities are eligible R&D activities, has now been made available following the registration of the Industry Research and Development (R&D) Regulations 2011 on 25 November 2011.
Australian R&D
The advance finding is applied for prior to the registration of activities, and will determine whether an activity is a core R&D activity, a supporting R&D activity, or neither a core nor supporting activity. The finding provides certainty for applicants as it:
- Binds Innovation Australia to register activities that the finding has determined as eligible; and
- Binds the Australian Tax Office (who administer the tax offset through the income tax return) to treat the activities as R&D activities when making a decision about whether expenditure associated with the activity is R&D expenditure.
Applications are due before the end of the income year in which the R&D activity was conducted or commenced, and will apply to that income year and the next two income years. The finding can only be relied on where the activities conducted are not materially different to the activities described in the advance finding.
The advance finding is neither a pre-condition for the registration of activities, nor does it replace registration. It will not benefit those companies who are confident their activities are eligible R&D activities.
Overseas R&D
Under the R&D incentive, applicants can now obtain a R&D incentive where part of the R&D activities are conducted overseas, provided the following conditions are met:
- The company receives an advance finding that the activity is an eligible R&D activity.
- The overseas activity must have a significant scientific link to one or more core R&D activities conducted in Australia. The Australian activities must be registered or be reasonably likely to be conducted and registered with Innovation Australia.
- The overseas activity cannot be conducted solely in Australia
because:
- Conducting it requires access to a facility, expertise or equipment not available in Australia;
- Conducting it in Australia would contravene a law relating to quarantine;
- Conducting it requires access to a population (of living things) not available in Australia; or
- Conducting it requires access to a geographical or geological feature not available in Australia.
- The total amount to be spent in all income years on the overseas activities is less than the total amount to be spent on R&D in Australia.
For a copy of the 'Application for Advance or Overseas Findings' on the AusIndustry website, please click here.
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