Changes coming in FY22

As a result of the 2020 Budget, the R&DTI is being amended from 1 July 2021, meaning that the changes will apply to FY22 onwards.

If a company has an aggregated turnover (AT) < $20m, then the refundable rate gets pegged at 18.5% above the company tax rate, which for base rate entities (AT < $50m) will be 25% – so 43.5%.

In the meantime there is a slight gain in net benefit for this category of company during FY21 because the tax rate is 26% but the offset is 43.5% so if profitable, companies in this bracket get 17.5% extra off the tax, if they are not profitable then this chews up the tax losses a bit quicker.

For companies $20m > AT > $50m the non-refundable rate is 38.5% in FY21 then + 8.5% in FY22 = 33.5% unless their R&D spend is more than 2% of overall expenditure (R&D Intensity) in which case it’s +16.5% on that portion = 41.5%

For companies AT > $50m the offset rate is 38.5% in FY21. Then +8.5% in FY22 = 38.5% unless their R&D spend is more than 2% of overall expenditure in which case it’s +16.5% on that portion = 46.5%

There will also be changes to the feedstock adjustments and grant clawback rules which will simplify how they are applied (they will both become additional income adjustments), and also close the incremental benefits that were loopholes allowing some base rate entities to retain a smaller net benefit for these expenditures.