Part E – R&D tax offset calculation

Instructions for completing Part E – R&D tax offset calculation.

R&D tax incentive core components

The R&D tax incentive has the following core components:

• For eligible entities with an aggregated turnover of less than $20 million, a refundable tax offset, unless they are controlled by one or more tax exempt entities. The offset is equal to your corporate tax rate plus an additional premium rate of 18.5%.
• For all other eligible entities, a non-refundable tax offset. The offset is equal to your corporate tax rate plus a premium rate based on the level of incremental R&D intensity (the R&D expenditure as a proportion of total expenses). If your notional R&D deductions exceed $150 million for an income year, the rate of the R&D tax offset is reduced to the company tax rate for the portion over $150 million.

Part E of these instructions help you work out:

• which offset you are entitled to
• the amount of R&D tax offset you claim at item 21 Research and development tax incentive in the Company tax return 2022.

For more information, see:

• Refundable and non-refundable tax offsets
• Eligibility for R&D tax offsets
• Clawback of R&D tax offset

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
• 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 items 9Q and 9R Cooperative Research Centre (CRC) contributions.

Work out your refundable R&D tax offset

Step 1

Show at Z1 Total notional R&D deductions the amount you show in Part A Z item 11 Total notional R&D deductions.

Step 2

Calculate your initial offset amount. If the amount at Z1 is:

• $150 million or less, multiply the amount at Z1 by your corporate tax rate plus 18.5%. This is your offset amount
• greater than $150 million    
  • multiply $150 million by your corporate tax rate plus 18.5%
  • multiply the excess over $150 million by your corporate tax rate
  • the sum of these two amounts is your offset amount.

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 only 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 non-refundable R&D tax offset

Step 1

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.

Step 2

If your item Z2 Total notional R&D deductions are:

• less than or equal to $150 million, Z2 is your step 2 amount
• greater than $150 million      
  • $150 million is your step 2 amount
  • your notional deductions amount less $150 million is your C1 amount.

Step 3

• Divide your step 2 amount by your step 1 amount to four decimal places.
• Multiply the result by 100 – to express it as a percentage to two decimal places.
• Show the percentage at W item 3 R&D intensity.

Step 4

Populate the notional deductions applied column A1 and B1.

If your step 3 percentage is 2% or less, show your step 2 amount at A1.

If your step 3 percentage is greater than 2%:

• at A1, show your R&D entity total expenses multiplied by 2%
• at B1, show your step 2 amount minus the amount at A1.

Step 5

Working out A2, B2 and C2

• To work out A2, multiply A1 by the sum of R item 1 Tax rate plus 8.5%.
• To work out B2 if you have an amount at B1, multiply B1 by the sum of R item 1 Tax rate plus 16.5%.
• To work out C2 if you have an amount at C1, multiply C1 by R item 1 Tax rate.

Step 6

Add up the amounts at A2, B2 and C2 and show the total at A item 3 Non-refundable R&D tax offset.

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.

Continue to: Taxpayer’s declaration