Over the week, the federal government announced that they are be scrapping their plan to cut $1.8 billion from the research and development incentive bill or RDTI. They have announced that the government will be committing a $2 billion boost to the tax incentive in an effort to help businesses manage the impacts of the COVID-19 pandemic.
This development was included in the recent pronouncements to the Parliament, as part of the new budget measures under an omnibus bill. The news is a welcome development, especially for companies with an annual turnover of less than $2 million, since including in the refinements is the scrapping of the $4 million refund cap.
They also detailed a straightforward two-tiered approach to determine the size of the offset for larger companies. In an article published by accountantsdaily, it said,
“The marginal R&D premium will be 8.5 percentage points above the claimant’s company tax rate for R&D expenditure between 0 percent and 2 percent R&D intensity, while R&D expenditure above 2 percent R&D intensity for larger companies will see the premium rise to 16.5 percentage points.”
The “enhancement” is also put off until July of 2021 to ensure that eligible claims made from 2019-20 will be treated retroactively under the newly enacted legislation. The dropping of the proposed cuts in the Research & Development will retain the $2 billion in the system for the next four years.
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