• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/16/2013

Australia - Accounting for tax effect of R&D offsets 

July 16: Companies in Australia need to consider—now that the new research and development (R&D) tax incentive is in the form of a tax offset—how to account for the tax effect of R&D offset claims in their financial statements.

The 30 June 2012 income year was the first year in which the 40% non-refundable and 45% refundable research and development (R&D) tax offsets applied.

With the current 30 June 2013 year, a majority of companies are first recognizing the tax effect of recently lodged claims and amendments in the financial statements.

Previously, tax benefits associated with the R&D tax concessions were recognized as an income tax benefit under Australian Accounting Standards Board (AASB) Standard 112 Income Taxes.

Now with the new R&D tax incentive in the form of a tax offset, it is necessary to consider whether the tax effect is to be accounted for under AASB112 or under AASB120 Accounting for Government Grants and Disclosure of Government Assistance.

Read a July 2013 report prepared by the KPMG member firm in Australia: Income Tax Benefit or Grant Income? R&D offset tax effects

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