Generous Support via the R&D Tax Incentive

The R&D Tax Incentive boosts competitiveness and improves productivity across the Australian economy by encouraging companies (foreign or local) to conduct research and development (R&D) that provides knowledge and skill spill-over to benefit the Australian economy. It provides businesses with more predictable, less complex support in Australia.

Entities conducting R&D are entitled to one of:

•  a 43.5% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million

•  a 38.5% non-refundable tax offset for all other eligible entities.

For companies with a tax loss position, the R&D Tax Incentive is a major benefit, granting a 43.5% cash refund of their eligible R&D expenditure. For many startups, this is a crucial means of extending their runway.

For companies in a profit making position, the Tax Incentive continues to subsidise innovation via a reduction in tax payable to levels more favourable than the U.S.'s prevailing 21% corporate tax rate.

Companies are able to access a significant cash benefit by conducting R&D in Australia.

A company that has spent $1 million on R&D can access a cash refund of $435 thousand. After taxes, the net benefit received will be $185 thousand.

Other reasons to Choose Australia

ECONOMIC STABILITY:

Australia has entered its 32nd year of uninterrupted annual economic growth, increasing more than three per cent on average each year since 1992. Australia is the only major developed economy to have recorded no recessions from 1992-to date.

SKILLED WORKFORCE:

Australia’s highly educated workforce has the skills to service a diverse range of industries. The quality of Australia’s ICT infrastructure, its human capital, and research, and scientific research publications are all ranked in the world’s top 10.

PROVEN EXPERIENCE:

Australia’s transition to a services based economy is driving the development of new technologies in agriculture, financial services, and health among other sectors. This includes the use of blockchain in finance, robotics in medical procedures, and the Internet of Things in agriculture.

GATEWAY TO ASIA:

Australia's free trade agreements and unique geographical location facilitate the smooth flow of goods, services, and investments across the globe. With 10 out of Australia's top 12 export markets located in Asia, international companies can take advantage of Australia's links to these markets in order to expand into or enter global value chains across the region.

ADDITIONAL REASONS:

Australia has a favourable exchange rate against the U.S. dollar. For the month of August 2024, the average USD/AUD exchange rate was $1.47.

Australia is a key member of the Asia Pacific Network of Science & Technology Centres (ASPAC) - a global network of science and technology centres.

to access the R&D Tax Incentive as a foreign entity, the following conditions must be satisfied

1.  You must be a resident of a foreign country that has a double tax agreement with Australia (such as the United States).

2.     The R&D activities must be conducted in Australia or an external Territory.

3.     If the R&D activity is a supporting activity, each corresponding core activity must be conducted solely within Australia or an external Territory and be an activity for which you have registered or could register for the R&D Tax Incentive for the income year.

4.     You must be:

a.    Connected with an Australian entity (at least 40% ownership)

b.     An affiliate of an Australian entity, or, the Australian entity must be your affiliate.

5.     The R&D activity must be conducted in accordance with a written agreement binding only on you and the Australian entity, specifying that R&D activities are to be conducted by either:

a.    Directly by the Australian entity,

b.     Indirectly by another entity under an agreement binding on the Australian entity.