STEP 6: How Do I Claim?

The Australian Tax Office (ATO) has set out six steps on its website to work out if you can claim the R&D Tax Incentive and, if so, how much. The ATO also explains how you lodge a claim for the offset. Below is a summary of the six points.
Remember, you need to keep accurate records.



You must be sure that you and your activities are eligible, you have registered with AusIndustry and you have incurred expenditure that qualifies. If you plan on using a tax agent  to help you lodge your returns or complete your forms, you need to make sure they are a registered tax agent.


You need to identify if you are controlled by any entities that are exempt from income tax because this factor will be taken into account in determining if you're eligible for the 43.5% refundable tax offset or the 38.5% non-refundable tax offset.



You need to calculate your annual turnover for the income year. Conditions apply if there is annual turnover for an entity connected or affiliated with your company.


If your annual turnover is less than $20 million and you worked out in Step 2 that you are not controlled by any exempt entities, then you can claim the 43.5% refundable tax offset (over $20m - 38.5% non-refundable offset).



Once you have worked out which offset you can claim, you can calculate the amount of your tax offset. You do this by multiplying the total notional deductions by the rate of offset you are eligible for. To calculate your claim for the 43.5% refundable R&D tax offset, multiply the total of the notional deductions by 0.435.


Once you have determined you can claim the R&D Tax Incentive tax offset, the final step is to lodge your claim for the income year. You claim the R&D Tax Incentive tax offset by completing a Research and Development Tax Incentive Schedule and relevant labels of the company tax return and lodging them with the ATO.


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Example: Company X's Tax offset


Example tax offsetCompany X is an R&D entity entitled to notional deductions of $150,000 for R&D expenditure.

Company X's aggregated turnover for the income year is $1,600,000.

Company X is not controlled by any exempt entities.

Company X is entitled to the 43.5% refundable R&D tax offset, which is calculated as follows:

43.5% x $150,000 = $65,250 R&D Tax Offset (refund subject to other tax liabilities)

Note that when completing your income tax return, the amounts that make up your R&D tax offset will be removed from your standard deductions. This occurs so that you do not receive both a standard deduction and the R&D tax offset for the same expenditure.