Assess your eligibility

Determining eligibility

The research and development (R&D) tax credit is based on the principle of self-assessment. This means that claimants are responsible for applying the eligibility criteria to determine if they are eligible to claim the credit.

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In order for you to assess your eligibility for the R&D tax credit, there are three sets of tests that you must consider:

1. You must be an eligible business/person
2. Your R&D activities must be eligible
3. Your expenditure on R&D must be eligible.

The sets of tests to be considered are outlined below:

1. Eligible business/person tests:

• Eligible business/person tests
• "On behalf of" tests.

2. Eligible R&D activities tests:

• Eligible R&D activities
• Resolution of scientific or technological uncertainty
• Appreciable novelty
• Excluded activities
• Support activities.

3. Eligible expenditure tests:

• Deductibility, eligible expenditure and depreciation loss
• Funding
• Minimum threshold
• Limits on internal software development expenditure

The R&D tax credit provisions are largely included in subpart LH of the Income Tax Act 2007 and in schedule 21 of the Act. A number of administrative provisions are included in the Tax Administration Act 1994.

The legislation repealing the tax credits is in part 2 of the Taxation (Urgent Measures and Annual Rates) Act 2008.

Date published: 06 Nov 2009

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