Posted By: R&D SmartTax

After passing the legislation for the new R&D Tax Incentive in September, the Federal Government has now started to release some of the more practical informaton to aid companies and tax practitioners in their interpretation of the new rules.

First to be released was the Draft Copy of the Advance or Overseas Finding form. While not for actual use, this does give some guidance as to the type of information the Government will request for advance registration.

Next came the Government’s feedback mechanism for the new R&D Tax Incentive, the R&D Tax Incentive – Discussion Paper with good news that the time for responses is now extended until Tuesday 31 January 2012.

Most recently the Industry Research and Development Regulations 2011 became operative on the 26th of November and provides presriptions on the level of information required in the Application to Register Activities. It is worth noting the level of information required is largely greater than the previous R&D Application form for the R&D Tax Concession and R&D Tax Offset.

In particular, Section 4.03 of the Regulations notes that the following information must be provided in the new Application to Register Activities:

  • whether an activity is Core or Supporting
  • the relationship of Supporting activities to Core activities
  • whether the Supporting activities meet the dominant purpose test if required
  • the new knowledge each Core activity is expected to generate
  • an expenditure breakdown between Core and Supporting activities

As companies with 30 June year ends are almost 6 months through the 2012 financial year, there may be concern as to whether current record keeping is sufficient to meet the new requirements. However despite this new information being released, there is still much more to come including industry guidelines and further fact sheets and pronouncements by the various committees surrounding the program. As such the recommendation here is still the same as previous. Continue with your record keeping, ensuring labour records are regularly maintained in sufficient detail. Don’t make any hasty decisions yet about the eligibility and scope of projects and stay patient, as we are trying to, with this transition phase.

If there are any specific queries, please do not hesitate to contact us at [email protected].

About R&DSmartTax

R&D SmartTax tools were born out of a desire to help the many smart small Australian companies access the R&D Tax Break benefits without the need for hours spent reading tax literature or expensive consultant fees. The R&D Eligibility Wizard is designed to be low cost, easy to use and available for all Australian industries.

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