Instructions for completing Part E – R&D tax offset calculation.
R&D tax incentive core components
The recent changes enacted to the R&D tax incentive do not apply to Early balancing SAP entities until their 2022-23 income year. The information below is for Early balancing SAP entities only.
The R&D tax incentive encourages certain companies to conduct R&D activities that benefit Australia. The incentive provides:
- a 43.5% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million, unless they are controlled by one or more tax exempt entities
- a 38.5% non-refundable tax offset for all other eligible entities.
If a company’s notional R&D deductions exceed $100 million for an income year, the rate of the R&D tax offset is reduced to the company tax rate for that portion exceeding $100 million. This change applies to assessments for income years starting on or after 1 July 2014 and before 1 July 2024.
Part E of these instructions help you work out:
- which offset you are entitled to
- the amount of R&D tax offset you can claim at item 21 in the Company tax return 2022.
For more information, see:
- Contributions under the CRC program
- Refundable and non-refundable tax offsets
- Grouping for aggregated turnover purposes
- Self-assess before you claim
- R&D tax incentive – 1 July 2011 to 30 June 2021
Item 1 Additional information
Show your corporate tax rate at R item 1 Tax rate. This will be either:
- 25% if you are a base rate entity, or
- 30% for all other companies.
Item 2 Refundable R&D tax offset
If you answered no to Part D items 1 and 2 and your notional deductions calculated under Part A Z item 11 total $20,000 or more, you can claim the refundable R&D tax offset.
If your notional deductions calculated under Part A Z item 11 total less than $20,000, then you are only entitled to a tax offset for notional deductions in relation to expenditure under Part A items 1A and 1B R&D expenditure – Research service provider (RSP) and Part A 9Q and 9R, Cooperative Research Centre (CRC) contributions.
Show at Z1 Total notional R&D deductions the amount you show in Part A Z item 11. Show at U Refundable R&D tax offset the amount calculated by multiplying the amount shown at Z1 Total notional R&D deductions by 43.5%.
However, if Z1 is greater than $100 million you will need to calculate the amount at U as:
- 43.5% multiplied by $100 million, plus
- the corporate tax rate multiplied by the portion of the amount shown at Z1 which exceeds $100 million.
For example, if an entity was entitled to a refundable 43.5% R&D tax offset and had $150 million of R&D notional deductions, it would be entitled to an offset calculated as follows (assuming a 30% corporate tax rate):
$100 million ×43.5% = $43,500,000
$50 million × 30% = $15,000,000
Total offset = $58,500,000
Show your refundable tax offset at U item 2 Refundable R&D tax offset. Transfer this amount to the Company tax return 2022 at U item 21 refundable R&D tax offset.
You do not need to complete item 3.
Item 3 Non-refundable R&D tax offset
If you answered yes to Part D item 1 or item 2 and your notional deductions calculated under Part A Z item 11 total $20,000 or more, you can claim the non-refundable R&D tax offset.
If your notional deductions calculated under Part A Z item 11 total less than $20,000, then you are only entitled to a tax offset for notional deductions for expenditure under Part A items 1A and 1B R&D expenditure – Research service provider (RSP) and Part A items 9Q and 9R Cooperative Research Centre (CRC) contributions.
Show at Z2 Total notional R&D deductions the amount shown at Part A Z item 11.
Work out the R&D entity total expenses:
- start with the amount you show in the Company tax return 2022 at Q item 6 Total expenses, less any amount that was already included at Q item 6 in a prior year
- subtract the amount you show in the Company tax return 2022 at D item 7 Accounting expenditure in item 6 subject to R&D tax incentive
- add the amount you show at Part A Z item 11 Total notional R&D deductions (X plus Y) in this Research and development tax incentive schedule 2022, less any amount that was included at Z item 11 in a prior year.
Show this amount at V item 3 R&D entity total expenses.
Show at A Non-refundable R&D tax offset the amount calculated by multiplying the amount you have shown at Z2 Total notional R&D deductions by 38.5%.
However, if Z2 is greater than $100 million you will need to calculate the amount at A Non-refundable R&D tax offset as:
- 38.5% multiplied by $100 million, plus
- the corporate tax rate multiplied by the portion of the amount shown at Z2 Total notional R&D deductions which exceeds $100 million.
For example, if an entity was entitled to a non-refundable 38.5% R&D tax offset and had $150 million of R&D notional deductions, it would be entitled to an offset calculated as follows (assuming a 30% corporate tax rate):
$100 million × 38.5% = $38,500,000
$50 million × 30% = $15,000,000
Total offset = $53,500,000
Show your non-refundable tax offset at A item 3 Non-refundable R&D tax offset. Transfer this amount to the Company tax return 2022 at A item 21 non-refundable R&D tax offset.
You are not required to complete: W, A1, A2, B1, B2, C1 or C2.
Taxpayer's declaration
If you do not lodge this schedule with your tax return, you must sign and date page 4 of the schedule.
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