R&D incentive

R&D tax incentives and ATO’s target industries audit

The R&D tax incentive is a tax offset benefit provided to companies who invest in eligible research and development activities.

If you are an eligible company you can get a refundable tax offset equal to 43.5% of your first $100m of eligible research and development activities if your turnover is less than $20m.

If your turnover is higher than $20m you may get a non-refundable tax offset equal to 38.5% of your eligible R&D expenditure.

You can apply for the R&D tax offset any time within 10 months of the end of the income year. I stress that you must apply before 30th April of the following year. No extensions are possible.

To find out if you are eligible and how to apply for the offset, review the steps below or give us a call. This is a difficult and often misunderstood area. Also with the right advice often the R & D Claim can resort in a significant financial boost to your business:

Step 1 Do you meet the four eligibility requirements?

1. Are you an eligible R&D entity?

You need to be an incorporated entity, rather than an individual, partnership or trust – call us or check the ATO’s site for full eligibility criteria

2. Have you conducted eligible R&D activities in the respective income year?

3. Have you registered with Ausindustry?

You need to register with Ausindustry before you lodge your claim

4. Do your notional deductions qualify?

Step 2 Are you controlled by an exempt entity? (an entity exempt from income tax)

If you are controlled by an exempt entity you can still claim the 38.5% non-refundable tax offset

Step 3 Calculate your aggregated turnover

Step 4 Work out which tax offset to claim

You can claim 43.5% or 38.5% . You are eligible for the higher rate if your turnover is less than 20m and you are not controlled by an exempt entity.

Step 5 Calculate your tax offset by multiplying your notional deductions by either 43.5% or 38.5%.

The notional deductions are calculated by reviewing all amounts incurred in a year and ascertaining what proportion or what amounts are applicable to R & D. For example you may attribute part of admin wages to R & D, travel costs, or other specific costs that relate to the project you are doing. To qualify expenses need to be incurred in research that has no known outcome. Hence there is an element of risk associated with the expenses that may not yield any future benefit.

Step 6 Lodge your claim

You need to complete a Research and development tax incentive schedule and the relevant labels of the company tax return and lodging them with the ATO

We are happy to assist and do this for you.

 ATO and AusIndustry Audits

The ATO and AusIndustry are the two organisations which administer the R&D tax incentive.

They will undertake undertake compliance activity for the 2016 financial year R&D applications over the coming months.

Four industries have been identified for auditing due to the significant number of claims with issues. These industries are:

  • agriculture
  • building and construction
  • mining
  • software development.

The remaining areas of concern are not industry based and include:

  • ordinary activities vs eligible R&D activities
  • apportionment of overheads
  • payments to associates
  • record keeping
  • R&D consultants’ fraud.

It really pays off to get professional help with your taxes.

Not all tax agents are the same. We all have different levels of knowledge and experience.

I have personally helped many companies save significant amount of money off their tax bill, and in this pharmaceutical company’s case this saving was as high as $732, 000.

Find out more about it here.

Tax scales

Last minute Tax Saving tips

Here is a brief list of things you can do before the end of June to reduce your tax bill this financial year.

As a Business

  1. Maximise your superannuation tax deductions for both your staff and yourself:
    • For the directors and owners pay up to the maximum cap ($30,000 or $35,000 depending on age).
    • For staff pay the June 2017 super before 30th You only get a tax deduction for super when it is paid. Calculate the super in advance and pay it on 28th or 29th June so that you get a tax deduction in the current year.
  2. Hold back invoices to customers for work done or not quite completed – if possible.
  3. Prepay expenses or incur expenses and be invoiced prior to June 30 for items that you know you will need to spend next year.
  4. Take advantage of the $20,000 small business concessions for plant & equipment purchased before June 30.
  5. Write-off obsolete stock or bad debts.
  6. Maximise your own wage up to the tax-free thresholds

As an Individual

  1. Pay any work expenses before June 30. Remember these are deductible on a paid basis only.
  2. Check on whether you can pay extra super before June 30.
  3. If you own a rental property consider prepaying the 2018 interest before June 30. That way you will get a tax deduction in this year.
  4. Consider any other prepayment of expenses that may be possible.
  5. Consider salary sacrificing into super. If you are in pension mode you can then draw it back tax free.

Happy tax saving!

For more specific and in-depth tax saving tips, please register for our webinar: ” How to legally minimise tax in 2017″ here

Tax couple

How to sort out and minimise your tax this year

It is never too late to clean up your tax mess or look at ways to minimise tax this year.

Allan Mason is an expert at helping business owners do exactly that.

Watch the video below to see how he managed to:

  • Wipe out $25,000 in ATO fees
  • Sort out 20 years of un-lodged tax returns
  • Put $17,124.82 tax refund back in the client’s pocket


If you are looking for ways to minimise tax legally this year and put your tax affairs in order, come to Allan’s webinar: “How to legally minimise tax in 2017”

Property Tax

The New Federal Budget and your Tax and Property Investment

Our second update on the new federal budget covers Tax and Property Investment.

These are the main areas of interest:

  1. Increase in Medicare levy
  2. Increase to Medicare levy low-income thresholds
  3. Capital Gains Tax Rules
  4. Reduced residential property deductions
  5. How we can help
  1. Increase in Medicare levy

From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5% of taxable income. The increase ensures the National Disability Insurance Scheme (NDIS) is fully funded.

  1. Increase to Medicare levy low-income thresholds

The 2016-17 financial year Medicare levy low-income threshold will be increased as follows:

Family status 2016-17 2015-16
Single $21,655 $21,335
Single, eligible for seniors and pensioners tax offset (SAPTO) $34,244 $33,738
Couple $36,541 $36,001
Couple, eligible for SAPTO $47,670 $46,966
Additional threshold for each dependent child $3,356 $3,306
  1. Strengthening the integrity of Capital Gains Tax rules for foreign investors

The Government is introducing tougher rules on foreign investment in real estate to ensure foreign investors meet their Capital Gains Tax (CGT) obligations. The main residence CGT exemption for foreign and temporary tax residents that own Australian real estate will be removed. To reduce the avoidance of foreign residents’ CGT in Australia, the Government will bolster the withholding regime.

  1. Reduced residential property deductions

From 1 July 2017, the Government will no longer allow deductions for travel expenses related to inspecting, maintaining or collecting rent for residential rental property. However, investors can continue to deduct those types of expenses incurred by third parties such as real estate agents and property management services.

In addition, from 1 July 2017, depreciation deductions on plant and equipment (for example dishwashers and fans) will be limited to outlays actually incurred on residential properties. For plant and equipment purchased after 9 May 2017, deductions are claimable over the effective life of the asset only by the investor who bought the items.

For investors with existing investments as at Budget night, grandfathering rules will apply, broadly allowing deductions to continue until either the investor no longer owns the asset or the asset reaches the end of its effective life.

  1. How we can help

The end of this financial year is approaching quickly.

If we haven’t reviewed your tax situation recently book a call with Allan Mason here.

Allan will review your tax position, answer your questions and advise on the best action steps you can take to get your tax affairs in top shape.

If you are serious about minimising your tax this year come and hear Allan himself explain how you can do this. You can register for his webinar presentation here

About Allan Mason

Allan is a Chartered Accountant, SMSF Specialist,
SMSF Auditor, Company Auditor, Registered Tax Agent

As the Principal of Encore Accounting Allan is committed to a service of excellence providing valued services to you directly and leading a highly competent and equally dedicated team of accounting and finance professionals.

Allan is delighted to be at your service.


Super Brisbane

Federal Budget 2017-18 and Your Superannuation

This is a three-part news update on the new Federal Budget and what it means to you presented by Encore Accounting.

In Part 1 we cover Superannuation and Social Security measures:

  1. Superannuation changes at a glance
  2. Additional Super contributions for downsizers
  3. First Home Super Saver Scheme
  4. Pensioner Concession Card reinstatement
  5. Energy Assistance payment
  6. Revised residency requirements for pensions
  7. Working age payments reforms
  8. Liquid assets waiting period increasing
  9. Family Tax Benefits

Please don’t hesitate to ask our team here any questions specific to your personal situation.

  1. Superannuation (and housing) incentives at a glance
  2. Additional Super Contributions for Downsizers

From 1 July 2018, individuals aged 65 and over will be able to make an after-tax super contribution of up to $300,000 ($600,000 for couples combined) from the proceeds of the sale of their home. This measure will only apply following the sale of a principal home held for a minimum of 10 years.

This new measure will not attract any special Centrelink treatment but it will allow eligible individuals to make contributions above the super caps, without being subject to work or age test requirements.First home super saver scheme

To reduce pressure on housing affordability the Government will allow voluntary superannuation contributions to be withdrawn for a first home deposit.

  • From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year, up to $30,000 in total, to superannuation for the purposes of this measure. Voluntary contributions can be made before or after tax and are subject to the relevant contribution caps.
  • From 1 July 2018 those voluntary contributions (along with deemed earnings) can be withdrawn for a first home deposit.
  • Withdrawals will be taxed up to an individual’s marginal rate, less a 30% offset. Withdrawals of after-tax contributions will not be taxed.
  1. Pensioner Concession Card reinstatement

From 9 October 2017 the Government will reinstate the Pensioner Concession Card (PCC) for former pensioners who lost their Age Pension as a result of the 1 January 2017 Age Pension changes. Those affected will receive the PCC and retain the Commonwealth Seniors Health Card, to ensure they continue to receive the Energy Supplement. Where they received the Low Income Health Care Card, that card will be deactivated.

  1. Energy Assistance Payment

From 26 June 2017, the Government will make a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017, and who reside in Australia. The payment is not taxable and will not be counted as income.

Qualifying payments include:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment Single
  • Veterans’ Service Pension, Veterans’ Income Support Supplement, Veterans’ disability payments
  • War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.
  1. Revised residency requirements for pensions

The Government will revise the residency requirements for claimants of the Age Pension and the Disability Support Pension (DSP) from 1 July 2018. Generally, claimants will now need to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless certain conditions or an exemption applies.

  1. Working age payments reforms

The Government will progressively consolidate seven working age payments and allowances into a new JobSeeker Payment or transition recipients to Age Pension.

The working age payments affected are:

  • Newstart Allowance
  • Sickness Allowance
  • Widow Allowance
  • Partner Allowance
  • Widow B Pension
  • Wife Pension
  • Bereavement Allowance.

If you are receiving one of these payments, speak with your financial adviser to find out how these changes may affect you.

  1. Liquid assets waiting period increasing

From 20 September 2018, the period that a person must wait before being paid an allowance (for example Newstart), if they have ‘liquid’ assets will increase from 13 weeks to 26 weeks.

  1. Family Tax Benefits

The Government will continue to keep the Family Tax Benefit (FTB) payment rate fixed until 1 July 2019. Indexation in line with the Consumer Price Index will resume from that date.

From 1 July 2018, all families with total income over $94,316 will have their Family Tax Benefit (FTB) Part A reduced by 30 cents for every dollar above $94,316.

If you have any questions about any points above please talk to one of our financial advisors – John Hall, Daniel Irvine. Book a call with either of them here.

They can also help review your super balances and the changes made to the legislation, consider what effects they may have on your fund and make the best recommendations accordingly.

Budget Aggregates

BUDGET 2017-18

Treasurer Scott Morrison has delivered his second Budget with the mission to create “better days ahead” for Australia.

As with every budget there are more benefits for some than for others.

We will be publishing a series of articles to highlight those benefits with specific emphasis on Tax, Superannuation, Small Business, Regulation, Housing, Spending, Innovation and Economy.

Here is an overview of what the new Budget intends to achieve:
• Boost the economy and help households, to ensure all Australians can benefit from the nation’s growth story. It seeks to create more opportunities for Australians and businesses, to guarantee essential services and create more and better paying jobs. The growth predictions if achieved will be great for the economy.
• Back small business and investing in future growth with funding for major infrastructure projects. The retaining the tax reduction for companies and the depreciation write-offs are positive measure to help achieve this.
• Guarantee Medicare to ensure Australians can access timely and affordable health care, by establishing the Medicare Guarantee Fund.
• Ensure the National Disability Insurance Scheme is fully funded by increasing the Medicare levy by half a percentage point
• Provide an additional $18.6 billion in funding over a decade for schools.
• Reduce the cost of living by improving Australians’ access to secure and affordable housing across the housing spectrum.
• Deliver further investment in infrastructure across our cities and in our regions to ensure the benefits of Australia’s economic growth are shared broadly across the country
• Protect Australian jobs by abolishing the subclass 457 visa. This visa will be replaced by a new temporary skilled visa restricted to critical skill shortages.
Together these measures aim to increase the economy’s performance that is vital to ensuring that we live within our means and are able to return the Budget to balance in 2020-21

This information is a summary of the budget overview presented on government.gov.au.

Next article:

Budget 2017-18 and Tax – with special emphasis on small business, first-home buyers and residential property investors.

For more specific and regular updates on how to save on tax, you are welcome to join our new educational series: “How to minimise tax completely legally”.