FIRSTMATE BLOG: CAPTAINS LOG

Tax changes to research and development (R&D)11.06.2014

Two tax measures which were signalled in last year’s Budget were explained in more detail in the 2014 Budget:

o Loss-making start-up companies will be able to “cash out” up to $500,000 of their tax losses from R&D expenditure (ie instead of carrying forward the losses, they will receive a cash payment). This cap of $500,000 will eventually rise to a maximum of $2 million.

o Businesses will be allowed tax deductibility for R&D “black hole” expenditure that is currently neither deductible nor depreciable. In particular:

  Capitalised development expenditure that relates to a patent, patent application or plant variety rights, and which results in a depreciable tangible asset, will be depreciable for taxpayers carrying out R&D.
  A one-off deduction will be available for capitalised development expenditure that does not result in a depreciable intangible asset.

These measures take effect from the 2015/16 income year

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