What is a Tax Credit? Definition or Meaning

Tax credits are a term used to describe tax deductions you may get for certain types of expenditures in Australia. The eligibility criteria vary for the types of business expenditures. In the United Kingdom, tax credits can also mean a type of benefit the government pays to its citizens provided they meet certain eligibility criteria. This may mean whose salaries are under a certain amount or those with dependent children.

For example…

Australia’s Research and Development Tax initiative is a type of tax credit the government gives businesses who satisfy eligibility criteria. Under the initiative, businesses who conduct experimental work to uncover new knowledge can be eligible to receive up to forty-three and a half percent of their expense back. After taking into account the company tax rate, which in Australia is thirty percent, this amounts to a tax credit of almost fifteen percent.