What is the R&D Tax Incentive? - How It Works | Fullstack — fullstack.com.au

There are a number of main criteria here which we will cover in detail. Technological Innovation A company must have undertaken eligible R&D activities during the income year. Broadly, an eligible core R&D activity meets all of the following criteria around technological innovation:   Experimental – Is there experimentation required on a technological-based level? It is important to note that the R&D will need to relate to technology based innovations not service based ones. Experimentation around commercial factors are also not counted – i.e. market testing an existing product with a different B2B customer or different industry.   Unknown Outcomes – Was the outcome of the experiment(s) unknown, and unable to be determined in advance? If we are developing algorithms or hardware, the outcome and the pathway to success should not really be known by a competent professional without experimentation.   Original – Was product/program created to create new technical knowledge or a new or improved product? The requirement here is ‘state of the art’ – that is the technology unique? If already executed overseas, then further review is required.   Scientific Method – Can you identify the identical theories or concepts you are trying to prove & the experiments needed to test them? This is to help demonstrate to others true innovation at the technological level which really require experimentation to unlock new learnings. Other Main Requirements Australian R&D Expenditure Generally, only the Australian expenses incurred in producing R&D activity will be eligible. Overseas expenditure could only potentially be eligible providing the facility, expertise or equipment was not already available in Australia. The process for claiming overseas R&D expenditure on this basis involves filing an additional Overseas Finding in advance of the main R&D Tax Incentive application.   Minimum $20,000 R&D Expenditure Potential claimants must spend more than the minimum threshold of $20,000 which must be incurred in the space of a financial year.   Corporate Structure Generally only companies are eligible for the benefit along with body corporates in the capacity of a trustee for a public trading trust.   Need to control the use and benefit of the IP The R&D activities need to be carried out to build your own IP, rather than say a corporate investor who owns and controls the IP of the venture. Factors to consider here are whom: has effective ownership of results from the R&D activities has an appropriate degree of control over the R&D activities bears the financial burden or risk of conducting the R&D activities

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