From 2010-11, the Government will replace the current R&D Tax Concession with a simplified R&D Tax Credit. I haven’t really looked closely at this one yet but it promises to cut red tape and provide a better incentive for business to invest in research and innovation.
The new Tax Credit provides a 45 per cent refundable credit for firms with an annual turnover of less than $20 million – equivalent to a Tax Concession of 150 per cent. This means that firms will receive a tax refund of 45 per cent of their R&D spending when they file their tax return.
Importantly, the refundable credit will be available to small companies in tax loss, with no limit on the level of R&D expenditure they undertake. This will provide a real boost to start-up companies in areas such as biotechnology and ICT. The Government have said that under the new Tax Credit system, eligibility criteria will be tightened to ensure that only genuine R&D is supported. A consultation paper will be released in the next few months to consult further on the eligibiltiy criteria in developing legislation for the new Tax Credit.
The complex Premium Concession and International Premium currently available under the R&D Tax Concession will be abolished.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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{ 3 comments… read them below or add one }
at G (my tax assesment) told that franking credit that income tax was paid on…now wont count for tax bonus (by formular)
and why nothing on the web about this?
and or from gov.
ie. tax form had franking creits as income but now not ????
Hi Lionel,
If I am understanding you correctly, you had some dividends and claimed the franking credits in your 07/08 income tax assessment?
This often causes confusion and no wonder. Fully-franked, partly-franked and unfranked dividends are all income for tax purposes. The franking credit portion is also included as income here, however your franking credits will act as a tax offset in the rebates section so they are pulled off again later in the return.
Basically, your dividend distribution is income and all components are included in the taxable income part of your assessment for which tax is calculated upon.
The franking credits themselves are a refundable tax offset. As such, this portion is also included at Label G and therefore, directly reduces your tax liability (you get your franking credits back whether or not you owe tax but, being a label G offset, they do affect tax bonus eliigibilty).
I’m not sure if any of that helps clear it up for you. Post again if I’ve not been clear and I’ll try again. Rest assured, the rules regarding franking credits have not suddenly changed.
AL christie
thank you for that
so why not change the annual tax form to suit
…our local member is to fight it due to the large number who have been conned