R&D Tax Incentive – Overseas Finding
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What is an overseas finding
Why is This Important?
Expanding your R&D activities beyond Australia can open up access to unique resources, specialised skill sets, and advanced technologies not available locally. This can significantly enhance the quality and scope of your R&D projects.
What Do You Need to Do?
To benefit from an Overseas Finding, you need to ensure your project meets specific criteria and gather substantial evidence to support your claim.
Background
The Australian government’s R&D Tax Incentive primarily supports domestic research activities. However, certain projects require resources only available overseas. These include specialised skills, geographical conditions, population studies, and advanced manufacturing standards. The key is to demonstrate that these overseas activities are indispensable and cannot be conducted in Australia.
How Do You Do It?
Here’s a step-by-step guide to securing an Overseas Finding:
- Assess Necessity: Ensure your overseas activity is essential and not based on cost alone.
- Gather Evidence: Compile desktop research, tender proposals, and expert opinions proving the necessity of overseas operations.
- Document Activities: Maintain detailed records of all R&D activities, both in Australia and abroad.
- Meet the 50% Rule: Ensure your overseas expenses do not exceed 50% of the total project costs.
- Apply Rigorously: Submit a comprehensive application demonstrating compliance with all requirements.
Expertise Not Available in Australia
When your activity requires access to expertise not available in Australia, you must demonstrate that you conducted a reasonable Australia-wide search and/or advertising campaign and provide evidence of being unable to obtain the necessary expertise domestically. Examples of acceptable evidence include:
- Independent Advice: From research organisations, industry associations, or other relevant entities addressing the lack of available expertise.
- Advertising Campaign Records: Documenting your efforts to find the required expertise in Australia.
If a thorough investigation has not been carried out, a substantiated explanation must be provided. For instance, if a specific overseas software developer’s expertise is indispensable, explain why a domestic campaign would be ineffective.
Facilities or Equipment Not Available in Australia
When your activity requires access to facilities or equipment not available in Australia, you must show:
- Non-existence in Australia: The facilities or equipment cannot be sourced domestically.
- Unavailability within a Reasonable Timeframe: The required facilities or equipment are fully booked and not available within a reasonable timeframe.
- Denied Access: Genuine attempts to access the existing facilities or equipment in Australia were denied.
Evidence might include letters of advice from relevant organisations or suppliers. If higher costs are the issue, you must provide evidence confirming the exorbitant pricing and explain why it renders the facilities or equipment effectively unavailable.
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Population Not Available in Australia
If your activity requires access to a specific population of living things not available in Australia, such as a particular group of humans, plants, or animals, you need to demonstrate:
- Insufficient Suitable Subjects: There are not enough suitable subjects in Australia.
- Reasonable Investigation: You have conducted a thorough investigation within Australia to locate the necessary population and provide evidence of this search.
Geographical or Geological Features Not Available in Australia
If your activity requires access to specific geographical or geological features not available in Australia, you must provide evidence demonstrating:
- Absence of Features: The particular feature is not present in Australia and cannot be replicated.
- Necessity: The feature is essential to your activity, and replication is not feasible.
Supporting Documents and Records
Evidence supporting your claims is assessed on a case-by-case basis. Statements should include:
- Expert Credentials: Brief statements of the expert’s qualifications and experience.
- Disclosure of Relationships: Any potential conflicts of interest.
- Enquiries Made: Statements of the specific enquiries made in providing the opinion.
- Verifiable Facts: Statements of specific facts supporting the opinion.
- Activity Description: Full descriptions of the activities and parts that cannot be conducted in Australia.
- Explanation: Factual explanations of why the activities meet the allowable reasons.
Worked Examples
- Example 1: A biotech startup requires a specific strain of bacteria only available in a European lab. After demonstrating the unavailability of this strain in Australia and its critical role in their project, they secure an Overseas Finding.
- Example 2: A renewable energy company needs to test their technology in arctic conditions. With no similar environment in Australia, they provide evidence and expert opinions justifying the necessity of overseas testing.
- Example 3: An agricultural tech firm needs to conduct trials on crops only grown in Africa. They show through tender proposals and desktop research that equivalent trials cannot be conducted in Australia.
- Example 4: A medical device manufacturer requires access to a population with specific genetic traits found only in South America. They substantiate their claim with research and expert endorsements.
The Approval Process
Applying for an Overseas Finding involves a more rigorous and time-consuming process than a standard R&D Tax Incentive claim. Be prepared for a stringent review process that scrutinises every aspect of your claim. You need to convincingly prove that your overseas requirements are not met in Australia.
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Possible Outcomes
Once submitted, your application could result in one of four outcomes:
- Eligible Activities: Full approval for claimed activities.
- Ineligible Activities: Rejection of activities that don’t meet criteria.
- Partially Eligible Activities: Approval for some but not all activities.
- No Decision: Lack of sufficient information for a decision.
Due Date for Lodgement
You must submit the application for an Advance or Overseas Finding before the end of the income year in which the activity was conducted. There is no provision under the Industry Research and Development Act 1986 (IR&D Act) for accepting Advance or Overseas Finding applications received after the statutory deadline. Industry Innovation and Science Australia (the Board) has no discretion to accept a late application.
A Finding is NOT Registration
A finding is not the same as, nor is it a substitute for, registration. To claim the R&D Tax Incentive, you must register your R&D activities annually with the Department of Industry, Science and Resources within 10 months of the end of the income year in which the activity was conducted. Failure to register R&D activities by the due date means you cannot claim the R&D Tax Incentive for the activities conducted in that income year.
Registration is NOT a Finding
Registration of activities does not, by itself, mean the activities claimed in the registration are eligible core or supporting R&D activities, or indicate compliance with the requirements of the R&DTI program. You need to self-assess the eligibility of activities you have, or intend to register for the R&D Tax Incentive unless you have previously received a positive Advance or Overseas Finding Certificate specifically for those activities. We may examine the eligibility of some or all of the registered activities for which an Advance or Overseas Finding Certificate has not been specifically issued. When you apply for a Finding, we may also examine registered activities included in your application, for which findings are not being sought. Separate findings, outside the findings sought in your application, on those activities may be initiated if necessary.
Need Help with the R&D Tax Incentive?
Navigating the complexities of the R&D Tax Incentive, especially with overseas findings, can be daunting. That’s where Bulletpoint comes in. With over a decade of experience and more than 500 successful applications, we are Australia’s highest-rated R&D tax consultant. Our team is adept at preparing robust applications that withstand rigorous reviews and audits by AusIndustry and the ATO.
Why Choose Bulletpoint?
- Expert Guidance: We help you evaluate eligibility, gather evidence, and submit comprehensive applications.
- Proven Success: Over 500 successful claims and a 4.8-star rating from 250+ Google reviews.
- Post-Submission Support: We assist with any follow-up queries, ensuring smooth processing of your claims.
FAQ
An Overseas Finding allows you to claim costs for R&D activities conducted abroad that are essential and unavailable in Australia.
You might need an Overseas Finding if specific resources, expertise, or conditions required for your R&D project are not available in Australia.
Activities that need specialised skills, unique geographical conditions, specific populations, or advanced manufacturing standards not available in Australia qualify.
No, lower costs in other countries are not a valid reason for an Overseas Finding.
Overseas expenses must not exceed 50% of the total project costs.
You must submit the application before the end of the income year in which the activity was conducted.
No, an Overseas Finding is not a substitute for registration. You still need to register your R&D activities annually.
Evidence such as desktop research, tender proposals, and expert opinions demonstrating the necessity of overseas activities is required.
Yes, Bulletpoint can assist with evaluating eligibility, gathering evidence, and submitting comprehensive applications. Contact Bulletpoint today.
If you miss the submission deadline, your application will not be accepted, and you cannot claim the R&D Tax Incentive for those activities.
Myths and Misconceptions about Overseas Finding and the R&D Tax Incentive
The R&D Tax Incentive does not accept cost savings as a reason for conducting activities overseas.
Only activities that are essential and unavailable in Australia qualify for an Overseas Finding.
Registration alone does not mean activities are eligible; a thorough assessment and approval are still required.
Substantial evidence, including research and expert opinions, is necessary to support your claim.
You must still register annually, and your activities may be reviewed to ensure ongoing compliance.
What is the #1 grant for start-ups?
12,000+ companies access the R&D tax incentive per year that yields a CASH REBATE of up to 43.5%.
This might be perfect your start up.
Do you want to know more?
- What exactly is the R&D Tax Incentive?
- How can my startup qualify?
- What defines eligible R&D activities?
- What expenditure can be claimed?
- How do I calculate the potential rebate?
- How can I identify if my product qualiies for R&D?
- What is the process to apply?
- How can I best document my R&D?
- What are common misconceptions about it?
- How can we help you through this process?
Bulletpoint is a Melbourne-based consultancy specialising in guiding businesses through the complex process of the R&D tax incentive. With a decade of experience under our belt, we’re proud to be led by Australia’s highest-rated R&D tax consultant. We’ve successfully lodged over 500 R&D claims, demonstrating a proven track record.
Our approach is straightforward and personable, focusing on cutting through the jargon to help businesses truly understand the definition of R&D in government terms. We’re passionate about what we do, and our clients appreciate this, often commenting on the difference our expertise has made to their businesses. They’ve praised us for uncovering grants they wouldn’t have otherwise known about and for making the whole process less stressful for them.
We’re proud to have an average rating of 4.8 stars from over 250 Google reviews. Despite our success, we continue to strive for improvement, learning from every piece of feedback we receive.
At Bulletpoint, we excel in helping businesses navigate the complexities of the R&D tax incentive process, ensuring they reap the benefits they deserve. As experts in our field, we’re well-versed in what works and what doesn’t when it comes to aligning businesses’ perceptions of R&D with the government’s eligibility criteria.
So, if you’re looking for accessible expertise and a proven success rate, you’ll find it with us at Bulletpoint. We’re ready to guide you through the R&D tax incentive process with a blend of professionalism and personality, ensuring your experience with us is not just successful, but enjoyable as well.