Company A spent $200,000 on its R&D activity this year, but made an overall loss of $300,000.
The ATO will give a 15% rebate on the R&D activity, which is $30,000.
It will also allow the company to cash in its losses at the company tax rate of 30%, up to the value of its R&D spend- so in this case 30% of its $200,000 R&D spend is $60,000.
Add this $60,000 to the $30,000 rebate and you get $90,000.
The ATO will give you this $90,000 as a tax refund.
That’s a big help to the cash flow for a business in a loss.
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