Australian tax incentives to woo technology innovators

The Australian Government introduced into Parliament on May 13 legislation to support a new, simpler and more generous tax-credit regime to support research and development undertaken in Australia. The program will double the rate of government support for R&D conducted by Australian firms turning over less than $20 million by introducing a 45 percent, fully refundable, R&D tax offset.

If the company is in a tax-loss position, this will equate to a cash check of 45 cents in the dollar for every dollar spent on R&D activities. Larger businesses will also receive more assistance than under the present program with the introduction of a non-refundable 40 percent R&D tax offset available for companies with annual turnover greater than $20 million. This effectively equates to a benefit of 10 cents in the dollar for every dollar spent on R&D activities. The big winners no doubt will be small innovative technology companies. The tax credit will provide them with greater access to cash refunds for their R&D expenditure and more generous rates of assistance.

Companies in the interactive game development industry are an example of those that will benefit the most from the proposed legislation. Australia has a dynamic and sophisticated game development industry with more than 50 developer companies and 200 titles. The industry has a wealth of experience, a large and talented skills base, great infrastructure and advanced technology.

Under the proposed definition of eligible R&D, the majority of development expenditure incurred by these developers in releasing a game title will qualify for the R&D benefit. The new R&D Tax Credit makes investing in the Australian game developers industry even more attractive. The Government expects the new R&D Tax Credit to start in July.

Marcus Tierney is a Director within the R&D Tax Concession and Government Grant Assistance group.  He has worked solely in the R&D tax space over the past 10 years helping hundreds of clients to maximize R&D tax claims. Marcus regularly presents at both internal and external forums regarding the R&D tax concession and government grant programs. The clients he has advised include many local, national and international companies, organizations and government agencies, which cover most industries, including the development of bleeding edge technologies.