R&D relief/credit is a type of Corporate Tax ( CT ) incentive that can reduce your enterprise’s tax bill. This tax relief can only be claimed if your business is liable for Corporate Tax or CT.
That said, here is a quick primer on how to go about claiming R&D tax credit for your company. If you are unsure of what the R&D Tax Incentive is all about, you can read about it here.
For starters, when should one claim for R&D tax credit?
You have to make any claim for this type of tax incentive in your annual CT return or – in some cases – the amended return. The acceptable time limit within which you can make your claim is usually two years after the elapse of the relevant corporate tax accounting period.
Improving Your Chances of A Successful Application
To boost your chances of being awarded R&D tax credits, it is advisable to take into account the following pointers
- Explain sufficiently to the Australian tax authorities why the organisation or company considers their projects or operations to be R&D.
- Provide a conclusive summary of all the cost incurred on the projects billed as R & D and how any figures filed in the returns were computed.
It is worth noting that while the above pointers are not a legal obligation, they are can significantly improve the chances of your organisation qualifying for Corporate Tax R&D credit.
The Impact of R&D Tax Credit
If you opt for just tax relief, instead of payable credits, you will only be able to reduce your organisation or company’s profit bracket that is taxable under CT for the specified accounting period. After this, the ATO will take care of the next part which is offering a relief to you.
However, should you choose to give up the enhanced relief in return for the receipt of tax credits, the ATO will make a payment to your nominated bank account at the end of the tax returns period after they have received your usual tax returns. The same applies to if you had made a claim to carry back a monetary loss to be effectively set off against the profits of a past accounting period.
Claiming for R&D Tax Credits can be a lengthy exercise in numbers, and that’s why its better to contact Femia Accountants to help you apply for it successfully.
Contact our office today on 9316 4500 or book a time to meet with us.