Solar PV Facility Project Financing & Contracting
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Research and development (R&D) tax incentive and government grants
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The R&D Tax Incentive is the Australian Government's principal measure to encourage industry investment in
Research and Development (R&D) in Australia. It is a broad-based program available to companies from all
industry sectors. In addition, there are other government assistance opportunities specifically for the support
of private infrastructure investment and other growth and development projects, through various State and
Federal grants programs.
Buyers and Project Developers should be aware of these
opportunities early to ensure that the agreements and
project structure allow for an appropriate company
to take advantage of the R&D Tax Incentive for the
developmental work being undertaken or to seek
assistance through a government grant.
The R&D Tax Incentive provides a Tax Offset to companies
that are involved in experimental activities that are
carried out to develop or improve products, processes, devices
or services. Currently, the benefit for companies with grouped
turnover in excess of $20m is a 38.5% non-refundable tax offset
providing a net benefit of 8.5%. For companies with grouped
turnover below $20m, the benefit is a 43.5% refundable tax
offset providing a net benefit of 13.5%
(if tax payable) or 43.5% (if in a tax loss position).
Key indicators of R&D for tax purposes include the
following:
•
•
The project is trying to achieve something that is an
advance or different from a technology stand point.
The project involves experimental stages including
design, modelling and testing (inc prototyping and
commissioning).
To take advantage of the R&D Tax Incentive, companies
must identify the R&D activities as they are commencing and
document those activities contemporaneously. At the end of the
financial year the company is required to register the activities
with AusIndustry so that the benefit can be realised through the
company's Income Tax Return.
State and Federal Government Grants may also be available for
the project in question or for other growth and development
activities that a company is undertaking. These grants are
typically provided on a matched funding arrangement and
applications should be made early prior to the project being
approved and funds being outlaid.
ARENA investment
The development may also be eligible for funding by the
Australian Renewable Energy Agency (ARENA). Developers
should consider whether there is merit in applying for ARENA
funding. Funding is guided by factors such as
•
whether the project advances renewable energy
technologies towards commercial readiness,
whether the project maximises value for money; and
ARENA's current investment portfolio.View entire presentation