Item 21 - Research and Development tax incentive

The non-refundable R&D tax offset is to be included on the Company tax return 2018 at label A item 21, is the amount calculated in Part E, item 5, label A Non-refundable R&D tax offset on the Research and development tax incentive schedule 2018.

This amount is then pre-filled to the dialog at label D Non-refundable carry forward tax offsets in the Calculation statement.

MYOB Tax will calculate the amount, if any, to be applied in the Calculation Statement.

Click label A to open the schedule BY, refer to Research and development tax incentive (BY).

If there was an amount of Non-refundable R&D offset unutilised in the previous year, that amount will be pre-filled to this new field on rollover.

Do not include an amount at B if you are prevented from using the non-refundable R&D tax offset from the income year ending 30 June 2012 by Division 65 of the ITAA 1997. For example, Division 65 states that before you can apply a tax offset brought forward from a prior year to reduce the amount of income tax that you will pay in a later year, you must apply it to reduce certain amounts of net exempt income. If the company is a base rate entity for the year, net exempt income is reduced by $1 for each 27.5 cents of the tax offset; otherwise net exempt income is reduced by $1 for each 30 cents of the tax offset.

If you have not previously claimed this non-refundable R&D tax offset, or you did not have any non-refundable R&D tax offset carried forward from one or more earlier income years commencing on or after 1 July 2011 you do not need to complete B item 21.

This amount is pre-filled to the dialog at label D Non-refundable carry forward tax offsets in the Calculation statement.

Click label B to use a worksheet that will calculate the reduction in accordance with the small business status of the company.

 Show at label C the amount of non-refundable R&D tax offset utilised in the current year. The non-refundable R&D tax offset can be utilised to reduce your tax payable to zero, but cannot go below zero - that is, not into a negative.

If the amount at label T2 Subtotal 1 in the Calculation statement is more than the amount at label D Non-refundable carry forward tax offsets in the Calculation statement, the amount at label C Non-refundable R&D tax offset to be utilised in current year, item 21, will be equal to the amount at label A Non-refundable R&D tax offset, item 21.

If the amount at label T2 Subtotal 1 in the Calculation statement is less than the amount at label D Non-refundable carry forward tax offsets in the Calculation statement, MYOB Tax will calculate the amount at label C Non-refundable R&D tax offset to be utilised in current year, item 21.

MYOB Tax calculates this total.

For eligible notional deductions on R&D activities that are $100 million or less, the non-refundable R&D tax offset is equal to the amount of eligible notional deductions x 38.5%.

For eligible notional deductions on R&D activities which exceed $100 million, the non-refundable R&D tax offset is equal to the sum of eligible notional deductions for the first $100 million x 38.5%, and eligible notional deductions in excess of $100 million x the applicable company tax rate.

Any unused portion of the non-refundable R&D tax offset may be carried forward to future income years, subject to the tax offset carry-forward rules in Division 65 of the ITAA 1997.

You must complete the R&D tax incentive schedule (BY) to complete the item 21 labels and the Calculation statement labels. MYOB Tax will calculate all those labels from the values entered in the R&D tax incentive schedule.

The amount to be shown at label D Non-refundable tax offset carried forward to next year is calculated by deducting the amount at label C Non-refundable tax offset to be utilised in current year item 21 from the amount at label A Non-refundable R&D tax offset item 21.

MYOB Tax calculates this total.

To claim a refundable R&D tax offset, an eligible company must:

• Have an aggregated turnover of less than $100 million, and

• Not be controlled by one or more income tax exempt entities.

The refundable R&D tax offset is equal to 43.5% of the first $100 million of eligible notional deductions on R&D activities, and 30% of eligible notional deductions on R&D activities which exceed $100 million.

For eligible notional deductions on R&D activities that are $100 million or less, the non-refundable R&D tax offset is equal to the amount of eligible notional deductions x 43.5%.

For eligible notional deductions on R&D activities which exceed $100 million, the refundable R&D tax offset is equal to the sum of eligible notional deductions for the first $100 million x 43.5%, and eligible notional deductions exceeding $100 million x the applicable company tax rate.

Due to the refundable tax offset rules in Division 67 of the ITAA 1997, the refundable R&D tax offset directly reduces basic income tax liability of a company (income tax). Where the amount of the refundable R&D tax offset exceeds the amount of tax that the company would otherwise have had to pay, then the excess is refundable (subject to any other tax debts owing).

The amount shown at label U Refundable tax offset is the amount calculated in Part E, item 4, label U Refundable R&D tax offset of the Research and development tax incentive schedule.

MYOB Tax includes this amount in your total at label E Refundable tax offsets in the Calculation statement.

Click label U to open the schedule BY, refer to Research and development tax incentive (BY).

This field caters for circumstances where a taxpayer not be required to complete the R&D tax incentive schedule needs to include a feedstock adjustment.

Label W will integrate from the Part B – Feedstock, item 3, label B in the Research and Development tax incentive schedule and to the Add-back reconciliation worksheet at Reconciliation item 7, label B – Other assessable income.

Click label W to open the Other addition items worksheet, refer to Other Addition Items worksheet (add).