In the May 2009 Australian Federal Government Budget the Labour Government announced its plans for a new Research & Development Tax Credit, this was to replace the Research and Development Tax Concession. It was designed to provide a tax offset and encourage companies to invest in research and development in Australia. On May 15th 2011 the Government announced the cross bench support for the new Tax Credit.
As part of the Budgets ‘Innovation Agenda’ the R&D Tax Credit applies to activities and costs incurred in the income year starting from July 1st, 2011. The Bill outlined 2 key changes to the existing R&D Tax Concession which applied to activities and expenditure in years prior to July 2011.
The two major components are a 45% refundable tax offset for eligible claimants with a turnover less then $20 million in the year, and a non-refundable 40% tax offset for all others.
This means some huge tax breaks for the development industry in Australia which the Game Development Association of Australia’s CEO, Anthony Reed, agreeing it’s a step in the right direction. Releasing this statement on the GDAA site, Tony said “Since the first announcement of the R&D Tax reform and in our own discussions with the Department, it became very clear that the government has confidence in the abilities of Australian SMEs to deliver ground-breaking innovations for the global market,” he went on to say “Innovation is at the heart of game development and the introduction of the new legislation not only assists in levelling the global competitive playing field, but also affords the local industry the opportunity to challenge traditional gameplay conventions. Games have both driven advances in technology and brought advanced technologies into millions of homes around the world. The industry is constantly exploring new mechanisms to create engaging and meaningful experiences for players,”
According to AusIndustry.gov.au which is an Australian Government run industry site breaks up the deference’s between the Credit and Concession.
The R&D Tax Credit is simpler, fairer and more accessible than the R&D Tax Concession. Key features of the new program include:
- more generous benefits, in particular for SMEs;
- a clearer definition of research and development activities;
- expanded access to foreign companies who undertake R&D in Australia and to companies that hold their intellectual property offshore; and
- greater certainty in R&D investment, with companies able to seek an advance finding from Innovation Australia where they are uncertain of the eligibility of the activity.
Like the R&D Tax Concession, the R&D Tax Credit:
- is a broad based market driven program accessible to all industry sectors;
- operates on a self assessment basis, allowing companies to determine for themselves whether activities conducted are eligible R&D activities;
- will be jointly delivered by Innovation Australia (assisted by AusIndustry) and the ATO; and
- requires companies to register their activities annually within 10 months after the end of the income year in which the activity was conducted.
If you are wanting more information on the R&D Tax Credit or you are wanting to know how to register, info is available here.