Paradigm Partners – Tax consulting firm catering to Australians

| November 11, 2013

The question we hear most often from new and prospective Paradigm Partners Australia clients is “will this credit really be worth my time?” There is a common misconception that the benefit of the Credit for Increasing Research Activities, may be outweighed by the amount of work associated with completing an R&D study. While it is true that some R&D studies may be more labor intensive than others, the benefit of the R&D credit is far greater than the time and effort required to complete a study when you have the experience of a consultant familiar with the nuances of the R&D credit.

The R&D credit was created with the intent of rewarding companies who take a risk trying something new. By building in two very important features, the value of the credit to companies in the Australia has been made invaluable.

A 45 per cent refundable tax offset (equivalent to a 150 per cent deduction) to eligible entities with an aggregated turnover of less than $20 million per annum.

A non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) to all other eligible entities.

AusIndustry and the Australian Taxation Office are responsible for delivering the R&D Tax Incentive.

Here at Paradigm Partners Australia, we work closely together and are available to help you.

Tax benefits can be either deductions or credits. Deductions are subtracted from your taxable income, which in turn is the number used to calculate your taxable liability. Therefore, for every dollar of deduction, taxable liability is only reduced by a fraction of that dollar.

Unlike deductions, credits are subtracted from the calculated taxable liability amount. This means that you calculate the amount you owe in taxes and then subtract the credit amount. The Program aims to help more businesses do R&D and innovate. It is a broad-based entitlement program. This means that it is open to firms of all sizes in all sectors who are conducting eligible R&D. It provides more generous support for businesses, especially small and medium-sized firms, than the R&D Tax Concession that it replaced.Practically speaking, this could mean you pay the bare minimum in taxes.

Brian Cameron, Executive Vice President of Business Development at Paradigm Partners Australia, believes this data strongly suggests that the R&D tax credit is beneficial to businesses. “If made permanent, the R&D credit will continue to provide an enormous opportunity for growth in all industries – not just the professional, technical, and scientific sector,” says Cameron.

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