The rates of the refundable and non-refundable R&D tax offsets will be reduced by 1.5 percentage points, with effect from 1 July 2014.
This means that the refundable offset will be reduced to 43.5% and the non-refundable offset will be reduced to 38.5%.
The refundable offset is available to R&D entities with an aggregated annual turnover of less than $20m (unless controlled by one or more tax-exempt entities). The non-refundable offset is available to R&D entities that do not qualify for the refundable offset. Note that the Tax Laws Amendment (Research and Development) Bill 2013 proposes to prevent companies with an aggregated assessable income of $20bn or more accessing the offset (the Bill is before the Senate).
The Government said that reducing the offsets by 1.5 percentage points is consistent with the Government’s commitment to cut the company tax rate by 1.5 percentage points from 1 July 2015, although the reduction in the rate of the R&D offsets is proposed to take effect from 1 July 2014.
Source: Budget Paper No 2 [p 18]
[WTB 20, 13/5/14]