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R&D Tax Incentive...you are doing it wrong!

common mistakes with the R&D tax incentive

Over the last few months we have worked with a large number of companies that had previously accessed the R&D Tax Incentive program either internally or through external consultants 'specialising' in this space.

We have found that companies/consultants are not getting things right with regards to specific areas within the R&D Tax Incentive.

Here are the top 10 things we have found:

1. Lack of sufficient detail in the AusIndustry R&D Registration Form which would enable an assessor to conclude R&D activities have been undertaken, minimising audit risk. 

2. Confusing experimentation with the product concept/market acceptance with experimentation to address technical or scientific knowledge gaps.

3. Misunderstanding the scope of activities that may qualify as R&D and associated expenditure that is claimable.

4. Not having the right structures or agreements in place to be able to claim the R&D Tax Incentive.

5. No focus on underlying substantiating documentation that links/evidences the R&D activities claimed and expenditure incurred. A key audit focus/risk area.

6. Thinking the current rate of the R&D Tax Offset is 43.5%.

7. Not understanding the definition of 'aggregated turnover', which is calculated on a group basis and determines the rate of R&D Tax Offset and refundability (ATO link).

8. Not understanding the 'for whom' (ATO link) and 'at risk' (ATO link) requirements which can dictate whether a claim can be made and the scope of a claim.

9. Thinking all software development qualifies and/or inappropriately making whole of project claims, a high risk area AusIndustry and the ATO are focusing on. 

10. Not using a consultant that is a registered tax practitioner, or that understands the nature of the scientific/technical activities undertaken.

A recent Innovation Australia update echoes some of these concerns and can be found here.

With great pride I can say we have been successful in tendering against 'Big Four' providers, and incumbent mid-tier firms based on our specialised software and technology industry R&D Tax expertise.

We have been able to significantly improve claim outcomes, efficiency, and minimise risk. Part of this involves applying a 'real time' assessment and substantiation approach. Something which is uncommon amongst R&D Tax consultants who often review/prepare a claim retrospectively. 

We offer existing claimants a no obligation, free "Health Check" review. This can provide you with peace of mind and comfort surrounding existing claims. 

It is carried out at no cost to you.

TALK TO US TODAY ABOUT HOW WE CAN MAKE OUR EXPERTISE WORK FOR YOU: info@rsfconsulting.com