The numbers are significant and are applicable whether your business is in profit or loss, providing a welcome cash boost to any business investing in innovation.
If you are in loss you will get a cheque from the ATO, if you are in profit your tax payable will be significantly reduced.
They vary slightly depending on whether your turnover is under or over $20m.
For businesses with a turnover of less than $20m if your business is in a loss in the financial tax year you will receive up to 45c for every dollar you have invested in R&D, which is made up of a 15 per cent tax credit and the ATO allowing you to cash in your losses for 30 per cent. This recompense comes in the form of a cheque from the ATO.
If your business is in profit you will receive a 15 per cent tax offset for every dollar you have spent on R&D.
If you are in profit, but not by as much as you spent on R&D you will get the 15 per cent credit which will come off your tax bill and the remainder will come back to you as a refund.
So for example if you invested $200,000 in R&D in the year, and your business made a loss of more than $200,000, you are entitled to a tax refund of $90,000. That is cash to you from the ATO. It is not a grant, it is an entitlement.
If you spent that $200,000 on R&D, and made a profit of more than $200,000, then your tax bill will be reduced by $30,000. That money goes straight onto your bottom line.
If you spent that $200,000 on R&D and made a profit of less than $200,000 your tax bill will be reduced by $30,000 plus you will receive 30 per cent of the difference. So for instance if you spent $200,000 on R&D and made a profit of $100,000 you will get an entitlement of $30,000 tax offset plus $30,000 as a cheque from the ATO.
If your business has a turnover of more than $20m the percentage figures are slightly lower, but the recompense is still very significant.
Whatever situation you are in the Federal Government wants to support you, and HorizonOne will access the funds for you.