Australian Industry Services.

The 125% Research and Development Tax Concession
- not just for companies with a tax bill.

This is one of the main incentives manufacturing companies can use to increase their cashflow.

The R&D Tax Concession equates to a 37.5% after tax grant if you are in loss, or starting up a company with low or no sales.

Or an 8% after tax subsidy of your R&D costs if you are in profit.

How does this work?

If you are a start up company with low or no sales in your first year (or you are in tax loss from the current or previous years) and you have a group turnover of less than $5 million, you can access the tax rebate, which is 30% of your total R&D spend plus the 25% concessional component. This equals an after tax grant of 37.5% of whatever money you spend on eligible R&D. Check the calculator at right with your own figures.

If you are in profit you can get an extra 25% tax deduction for a tax year, even if you have already lodged your tax return. Plug in your figures to the calculator.

Broadly speaking, to qualify for the tax concession you need to satisfy the following criteria:

1. You are developing new or improved products or processes.
2. The project involves EITHER significant technical risk OR innovation or both.

The costs which can be included in R&D costs are labour, overheads, materials for prototypes, testing costs, contractors’ costs and a few other items. Sometimes other materials can be claimed.