An R&D Tax Claim is no different to any other type of tax in Australia – everything must still follow the rules for substantiation and compliance. There are two government bodies that look after compliance for R&D Tax Claims in Australia. AusIndustry administers the rules associated with the eligibility of R&D activities, and the ATO administers the rules associated with the eligibility of R&D expenditure. Your company may be contacted at some point after you lodge your R&D claim by either AusIndustry or the ATO to discuss your compliance and it is worth knowing that due to the self assessment tax regime in Australia, your R&D claim is not actually considered to be eligible until given the all-clear by these bodies.
Fortunately there is a lot of guidance available to help you with your R&D tax compliance. Our four tips below cover the key areas you need to know about:
1. Be technical, detailed and descriptive in your R&D claim documents.
AusIndustry’s first step in its new review regime is to look at your R&D Application for any areas that require further attention. If your project Technical Objective is technical, detailed and descriptive this will reduce the chance of progressing further in the review. Similarly, your R&D Plan should also get to the heart of why your project is new or different to that in the public arena, and what activities you are doing to overcome the technical issues.
2. Document and record all R&D activities and R&D expenditure
If you have undertaken research, file your research findings. If you have undertaken trials, record and detail each trial result. Record assets used in R&D activities including why and for how long. Expenditure requires source documents such as invoices. If possible use employee timesheets, but if not, either use logbooks, diaries or create your own weekly time record for relevant staff involved in R&D activities.
3. Keep a Folder
One of the easiest things you can do is to create an R&D folder to store all your information. Not all information needs to be especially created for your R&D Tax Claim. You can easily use documents created by day to day procedures that your company already has in place. This especially works for your R&D Plan which can use meeting minutes, Gantt charts, design drawings, risk assessments, memos, emails or any other similar type of document that you use to share information.
4. Get assistance
An experienced R&D tax consultant will be able to review your claim or assist you with any compliance help you require. A little work upfront could save a lot of hassle down the track. R&D SmartTax has partnered with one of Australia’s best known R&D tax firms, Michael Johnson Associates to help our customers with any additional R&D tax compliance assistance. Click Here to find out more about how they can help you.
To conclude, R&D tax compliance can be quite simple and most companies find no problem with it. R&D SmartTax has worked with both AusIndustry and the ATO over the past decade and has used this experience to create all of its tools including the popular Templates that will help you correctly record your R&D information. If you ever have any questions or queries about R&D Tax Compliance feel free to contact us at [email protected].
