Who can claim the R&D Tax Incentive?

Who can claim the R&D Tax Incentive? To claim the R&D Tax Incentive, you need to be an ‘eligible entity’, which means that you need to be an incorporated company. Individuals and partnerships are not eligible. If your company is incorporated in Australia, it is pretty simple – you’re eligible. If your company is incorporated overseas, it is more complicated.

The following is AusIndustry’s definition from the recently updated draft guide (see R&D Tax Incentive – Guide to Interpretation). The Australia Taxation Office also pushes the definition (see Eligible Entities).

  • Each of the following is an R&D entity:
    • a body corporate incorporated under an Australian law
    • a body corporate incorporated under a foreign law that is an Australian
  • A body corporate incorporated under a foreign law that:
    • is a resident of a foreign country for the purposes of an agreement in force between that country and Australia that:
      1. Is a double tax agreement (as defined in Part X of the Income Tax Assessment Act 1936); and
      2. Includes a definition of permanent establishment; and
  • carries on a business in Australia through a permanent establishment (within the meaning of that definition) of the body corporate in Australia;

is an R&D entity to the extent that it carries on business through that permanent establishment.

  • However, an exempt entity cannot be an R&D

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