Every R&D tax incentive turns eligible spending into a benefit. The schemes differ in what that benefit is, how large it is, whether a loss-making company can receive it as cash, and when it arrives. This module gives you the four questions to ask of any scheme, then shows how each of the seven countries answers them.
What this module covers
- The three forms a benefit can take: a credit against tax, an offset or payable amount, and an enhanced deduction from taxable profit.
- Why the headline rate alone does not tell you what a claim is worth.
- Refundability: what happens when there is no tax to reduce.
- Timing: when the benefit reaches the company and what has to happen first.
Three kinds of benefit
A credit reduces the tax bill directly. A credit of 100 reduces tax by 100. Whether it is worth anything to a company with no tax to pay depends on whether the scheme makes the credit refundable, lets it be carried to another year, or lets it be set against another liability such as payroll tax.
An offset or payable credit works like a credit but is designed to be paid out in cash when it exceeds the tax due, usually subject to a condition such as a turnover threshold or a cap linked to payroll taxes.
An enhanced deduction increases the amount deducted from taxable profit. Its value depends on the company's tax rate: a deduction of 100 at a 17% tax rate is worth 17 in tax saved. This is why deduction-based schemes quote large percentages that are not comparable with credit rates.
How the seven schemes work
The table below shows, for each country, the form of the benefit, the headline rate and whether the benefit can be received as cash. Each country name links to its guide and official sources.
| Country | Benefit | Headline rate | Refundable |
|---|---|---|---|
| United States Research credit, IRC section 41 | Income tax credit | 20% regular credit or 14% alternative simplified credit (15.8% or 11.06% if the reduced credit is elected) | No Qualified small businesses can use up to US$500,000 a year against payroll tax |
| United Kingdom Merged RDEC scheme and ERIS | Expenditure credit | 20% expenditure credit. ERIS: extra 86% deduction and a payable credit of up to 14.5% of the surrenderable loss | Yes Payable, capped at £20,000 plus 300% of PAYE and National Insurance |
| Ireland R&D corporation tax credit | Corporation tax credit | 30% of qualifying expenditure, 35% where the corporation tax return filing date is on or after 23 September 2027, which typically means accounting periods ending on or after 31 December 2026 | Yes Paid in three instalments |
| Canada SR&ED tax incentives | Investment tax credit | 35% enhanced credit, 15% basic credit | Yes, for most CCPCs Current expenditure fully refundable at the enhanced rate |
| Australia R&D Tax Incentive | Tax offset | Corporate tax rate plus an 18.5% premium (refundable), or plus 8.5% or 16.5% (non-refundable) | Yes, under A$20 million turnover |
| New Zealand R&D Tax Incentive | Tax credit | 15% tax credit | In some cases Refunds are capped, including by labour-related taxes |
| Singapore Enterprise Innovation Scheme (EIS) | Enhanced deduction | 400% deduction on the first S$400,000 of staff costs and consumables for qualifying R&D carried out in Singapore, each Year of Assessment from YA 2024 to YA 2028, 250% above | Optional cash payout Up to S$20,000 a year, with conditions |
Reading the headline rate
Three adjustments separate a headline rate from the value of a claim.
- The base. Some schemes apply the rate to all qualifying expenditure; others apply it only to spending above a base amount, or only up to a cap. The same rate on a different base gives a very different result.
- Tax on the benefit. Where the benefit is itself taxable, the net value is the gross amount less tax at the company's rate.
- Elections and alternatives. Several schemes offer more than one calculation method or an election that trades a simpler calculation for a lower rate. The country tracks of this program work through those choices with a worked example.
When the benefit arrives
A benefit that reduces tax arrives when the tax return is processed. A refundable or payable benefit arrives when the tax authority pays it, which may follow the return, follow a registration or approval step, or be spread across instalments. The deadlines page for each country sets out the order of events; the point for a finance team is that cash timing depends on the scheme's process, not only on the company's year end.
How it interacts with the rest of the computation
Three interactions recur across the seven schemes and are covered in later modules: grants and other public funding can reduce the eligible base or the rate; group structures decide which entity claims; and the treatment of subcontracted and overseas work differs sharply between countries.
Self-check questions
Answer each question, then open it to compare.
Which of the seven schemes gives its benefit as an enhanced deduction rather than a credit or offset, and why does that make its percentage hard to compare with the others?
A company has no tax to pay this year. Name the two features of a scheme that decide whether its claim is still worth something.
Two schemes both quote a 20% rate. Give two reasons the value of a claim could still differ.
Which countries in the table require a registration or approval step before the benefit can be claimed, according to the pre-registration column of the comparison?
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Educational content only, not tax advice. See the disclaimer.