Hi there. The R&D Tax Incentive is a tax offset program run by AusIndustry and the Australian Taxation Office to encourage more companies in Australia to engage in research and development (R&D) activities. Companies wishing to make use of the program must lodge an application to register with AusIndustry within 10 months after the end of their income year.

For a business to be an eligible R&D entity, it must be a company incorporated under Australian law or incorporated overseas but an Australian resident for income tax purposes. Individuals, corporate limited partnerships and ‘exempt entities’ (i.e. a business whose entire income is exempt from income tax) are not eligible to apply for the R&D Tax Incentive. Trusts are also not generally eligible R&D entities.

This means your business must be structured as a company (and not as a sole trader, partnership or trust) to be eligible for the R&D Tax Incentive. There are many other eligibility criteria for the R&D Tax Incentive that your business would need to satisfy. These criteria relate to the types of activities your business undertakes and the types of expenditure against which you intend to claim the tax offset. More information about the R&D Tax Incentive can be found atwww.randdsnapshot.business.gov.au.

Suggested way forward

Deciding on the best legal structure of your business is an important decision, as it can have wide ranging implications for risk management, financing, insurance, employment and tax. While the R&D Tax Incentive is only available to companies, you should consider obtaining more general advice from a commercial lawyer about the best way to structure your business. By pressing the “Consult a Lawyer” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.