Australia R&D Tax Incentive (Income Tax Assessment Act 1997 Division 355) 355-100: ss 355-100 to 355-115 Work out the offset at the correct rate, threshold and cap

The offset is a percentage of total notional deductions (R&D expenditure, decline in value, earlier-year associate expenditure, partnership assets and CRC contributions): for an entity with aggregated turnover under $20 million that is not controlled by exempt entities, its corporate tax rate plus 18.5 percentage points (refundable, s 67-30); otherwise its corporate tax rate plus a premium of 8.5 per cent on notional deductions up to 2 per cent of total expenses and 16.5 per cent above that (non-refundable). Exempt-entity control is tested at 50 per cent under the connected-entity rules. Below $20,000 of notional deductions only research service provider and CRC expenditure qualifies; above $150 million the excess gets only the corporate tax rate. Total expenses for the intensity test are the entity's accounting total expenses plus notional deductions not already in them, each counted once (s 355-115). Notional deductions count only for the offset and the listed provisions (s 355-105) and include prepaid expenditure (s 355-110). Pending: the exposure draft Treasury Laws Amendment (Tax Reform No. 5) Bill 2026, Better targeting the R&D Tax Incentive (released 11 September 2026, not introduced as at 30 September 2026), would apply to income years starting on or after 1 July 2028.