R&D Tax Credit Assistance
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One of the largest innovation grant programs provided by the Australian government for businesses and corporations is the R&D Tax Credit.
The R&D Tax Credit is rebate program for companies that are conducting research and development in Australia.
Applicants can put together an application, outlining their experimental work, and submit the activities to be registered by AusIndustry.
After successful registration of the R&D activities, applicants can then include their complementing costs with their tax return to await delivery of the rebate with their tax return.
Eligibility for the R&D Tax Credit
The eligibility of your business or company is based on several factors.
On the business side of things, you are eligible for a credit if:
- You have spent $20,000 or more on eligible R&D activities
- You are an Australian entity (not a trust)
- You are conducting your experimentation in Australia
- You are conducting your activities for the purpose of generating new knowledge.
Exceptions can made for activities taking place outside of Australia, if they meet the guidelines outlined in a separate application called an “Overseas Finding”.
Eligibility for the programs comes under a “self-assessment” process; essentially, you are asked to determine whether you fit the guidance provided by the government.
While you are assessed by two separate bodies before receiving the funds, the tax credit amount and activities are largely outlined by each applying company.
How big is it?
About 13,000 companies are registered in the R&D tax credit, of which about 10,000 claim the refundable tax offset. The remaining 3000 firms claim the non-refundable tax offset.
After reading through the guidance and determining whether or not you are eligible, you will need to begin putting together the activities registration.
You will need to complete the R&D Tax credit application form.
Each year that you have eligible work, you will need to complete a new form with your eligible activities, in order to receive your R&D Tax Credit.
Things to keep in mind
Some things to keep in mind:
- Registration of the R&D activities has a deadline of ten months after your financial year end, e.g. if your financial year ends on June 30, your final application date will be April 30 the following year; and
- You will need to have the activities registered and receive your Innovation Number before you can include the R&D Tax Credit workings in your income tax return.
The current R&D Tax Credit laws came into existence back in 2011; however, companies that wish to access tax offsets from before this date can do so.
You will need to register all R&D activities that your company conducted before July 1, 2011 and await approval. (Note: retrospective claims are heavily scrutinised).
Claiming the R&D Tax Credit is a simple process.
You can access the offset by following these steps:
- Make sure that your company is eligible
- Draft your application, including detailing of your eligible experimental activities
- Draft the complementing budget and allocate your expenses between to your project(s)
- Lodge the activities with AusIndustry
- Await a response confirming registration of your activities and receive your Innovation Number
- Include the conclusions in your Income Tax Return
- Lodge your return
You will receive your offset with the completion of your tax returns.
Contesting the government’s analysis
The government can and will reject activities they do not deem eligible with a Request for Information (RFI).
This will state their queries with your claims and request you expand on the work, eventually determining their stance on your work after you have responded.
The program is a self-assessment, but under query of the government, the interpretation of whether or not your work is eligible is the decision of AusIndustry.
Your RFI is your best chance of appealing, and is the government giving you a second chance to further justifying and expand on your claims.
The ATO can also contest your financial inclusions.
This will come in the form of financial evidence and workings that accompanied the R&D Tax Credit claim.
You may appeal, if you have failed an RFI from either party, which will enter formal legal territory.
Find Out How to Maximise Your Claim
Call For Assistance 1300 658 508
Maximise your R&D Tax Credit
Having worked as an R&D consultant for a number of years, I have seen how companies can legitimately increase their credit.
Contact us for assistance with determining your R&D intensity.