An eligible company will be entitled to an R&D tax offset if its total notional deductions for an income year are at least $20,000. If your total notional deductions are less than $20,000, you will only be able to obtain the R&D tax offset for:

  • expenditure incurred to a Research Service Provider (RSP) for services within a research field for which the RSP is registered under the Industry Research and Development Act 1986 (IR&D Act 1986), where that RSP is not an associate of the R&D entity
  • expenditure incurred as a monetary contribution under the Co-operative Research Centre (CRC) program.

ATO guidance on the topic. Learn more here

In LodgeiT, you have to activate  the "Research & Development (R&D)" via financial image

To complete the form in LodgeiT, you should have a clear idea of your accounting expenditure that's eligible. The correct expenditure should be aligned with the expenditure on your Application to secure R&D submitted via the R&D Portal.

Press "Yes" and enter relevant values. If you've used the services of a specialist R&D application service provider, all these values should be made available to you. If not, be sure you understand the R&D system in detail. The ATO regularly claw back claims for R&D that are later proven to be ineligible. Optimally, always secure an advanced finding.

Once the R&D Item 21 is complete, you'll see your expenditure at Item D & the associated tax offset at Item U.

Click "Edit" to navigate into the schedule.

Note that the R&D accounting expenses are added back and form part of the "Reconciliation" section. Accordingly, in this example there is a tax liability on the taxable income AFTER adding back the R&D rebate.

Typically, you should then record the net tax refund on the balance sheet and the R&D Rebate as a revenue item. This will be non-assessable.