Information about these instructions including who is eligible and who must complete the Research and development tax incentive schedule.
Introduction
These instructions are for early balancing entities with a substituted accounting period. They will help you complete the Research and development tax incentive schedule 2022, which in turn will help you complete item 21 Research and development tax incentive in the Company tax return 2022. For more information about the R&D tax incentive, see R&D tax incentive – 1 July 2011 to 30 June 2021.
Changes to the Research and development tax incentive apply for income years commencing on or after 1 July 2021, therefore for early balancing entities with an early balancing substituted accounting period this will be the year that commences on or after 1 January 2022.
If you have a standard balance date or are an entity with a late balancing substituted accounting period, please use the Research and development tax incentive schedule instructions 2022.
When we refer to 'you' in these instructions, we are referring to the company or the person responsible for completing the Research and development tax incentive schedule 2022 (NAT 73794). This publication is not a guide to income tax law. If you feel this publication does not fully cover your circumstances, get help from us or a registered tax adviser.
Changes to the Research and development tax incentive apply for income years commencing on or after 1 July 2021, therefore for early balancing entities with an early balancing substituted accounting period this will be the year that commences on or after 1 January 2022. If you are not one of these entities, use the Research and development tax incentive schedule instructions 2022.
Who must complete a Research and development tax incentive schedule?
You must complete and lodge a Research and development incentive schedule 2022 if you make a claim at A item 21 Non-refundable R&D tax offset or U item 21 Refundable R&D tax offset in your Company tax return 2022 for an R&D tax offset under the R&D tax incentive, that is, Division 355 of the Income Tax Assessment Act 1997 (ITAA 1997).
If you have a feedstock adjustment (additional assessable income) but are not claiming an R&D tax offset in this year of income:
- you do not need to complete the Research and development tax incentive schedule 2022.
- you will still need to work out this amount and include it at W item 21 Clawback amounts – additional assessable income and B item 7 Other assessable income in the Company tax return 2022. See Part B for information about how you work out your feedstock adjustment.
Who can claim the R&D tax incentive?
You may be entitled to claim the R&D tax incentive in your Company tax return 2022 if you are an R&D entity that has registered its R&D activities with AusIndustry for 2021–22.
Only R&D entities can register R&D activities and claim the R&D tax offset. You are an eligible R&D entity if you are a corporation that is any of the following:
- incorporated under an Australian law
- incorporated under foreign law but an Australian resident for income tax purposes
- incorporated under foreign law, and both of the following apply
- the corporation is a resident of a country with which Australia has a comprehensive double tax agreement which includes a definition of 'permanent establishment', and
- the corporation carries on business in Australia through a permanent establishment as defined in the double tax agreement. It is then eligible to the extent that it carries on business through that permanent establishment.
You are not eligible for the R&D tax incentive if you are:
- an individual
- a corporate limited partnership
- an exempt entity (because your entire income is exempt from income tax).
Trusts are not generally eligible R&D entities. The exception is a body corporate in the capacity of trustee for a public trading trust.
For more information see Who can claim.
You must register before claiming
It is a condition that you register your activities with AusIndustry to be entitled to the R&D tax incentive. You must lodge your application for registration of the activities within 10 months of the end of your income year. For example, if your income year ends on 31 December, then you must register with AusIndustry by 31 October of the following year.
You must register with AusIndustry before you make a claim for the R&D tax incentive on the company's tax return.
Who are the R&D activities conducted for?
Generally, an R&D entity is only entitled to a tax offset if the R&D activities were conducted for one of the entities below:
- the R&D entity itself
- a foreign corporation that is
- connected with, or an affiliate of, the R&D entity (or the R&D entity is an affiliate of the foreign resident)
- a resident of a country with which Australia has a comprehensive double tax agreement.
R&D activities that are conducted for a foreign corporation must be conducted under a written agreement meeting certain conditions between the R&D entity and the foreign corporation.
Additionally, if the R&D entity is a foreign corporation carrying on business through a permanent establishment in Australia, it may be entitled to an R&D tax offset if the R&D activities are conducted for the foreign corporation (and not for the permanent establishment in Australia).
For more information, see:
Who administers the R&D tax incentive?
The R&D tax incentive is jointly administered by AusIndustry and the Australian Taxation Office (ATO).
For information about how to register for the R&D tax incentive and about what R&D activities qualify for the incentive:
- business.gov.auExternal Link
- phone AusIndustry on 13 28 46.
For information about what amounts are eligible for the R&D tax incentive and how to claim see R&D tax incentive – 1 July 2011 to 30 June 2021.
Lodgment
Lodge the completed Research and development tax incentive schedule 2022 with the appropriate Company tax return.
If you have requested an amendment
If your company has made a request for an amendment that includes changes to its R&D claim, you must complete a Research and development tax incentive schedule showing the amended figures. Send this schedule, with a letter requesting the amendment to:
Australian Taxation Office
PO Box 3004
PENRITH NSW 2740
Abbreviations and unfamiliar terms
For an explanation of any terms used in these instructions that are unfamiliar to you, see Definitions and Abbreviations.
Continue to: Before you complete the Research and development schedule