R&D Tax Incentive Application Assistance

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What is an R&D Tax Incentive Application?

The R&D tax incentive application is a form used to register research and development activities for the R&D tax offset.

 

What is R&D tax incentive?

The R&D Tax Incentive is the Federal Government’s tax offset aimed at improving productivity and boosting competitiveness across the Australian economy. There are around 13,500 entities registered for R&D activities across various sectors of the economy, including mining, manufacturing and services.

 

Background

The R&D tax incentive application form is used to apply for registration of research and development (R&D) activities for the R&D Tax Incentive (Section 27A, Industry Research and Development Act 1986).

 

Why do you need to register your activities?

R&D tax incentive application is used by AusIndustry for:

  • compliance review activities
  • identifying R&D industry trends

 

R&D Tax Incentive Example

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R&D Tax Incentive Application

Who is in charge?

Innovation Australia and AusIndustry are responsible for registration of activities in the R&D tax incentive application and for determining whether activities are eligible.

The ATO is responsible for determining the eligibility of whether you can apply and of expenditure incurred and claimed under the program.

 

 

What is the timing?

Completion of the R&D tax incentive application is done on an annual basis.

You have 10 months after the end of your company’s income year in which the R&D activities were conducted.

For most companies this is 30 April the following year.

 

 

Main Sections

The R&D tax incentive application is broken down to separate the key components of a scientific experiment, requesting you to outline:

  • Company overview
  • Project technical outline
  • New knowledge generated
  • Unknown outcomes of the project
  • Core and supporting activities undertaken

 

What are you being asked to provide?

In the R&D Tax Incentive application, you are being asked to break down your R&D experiment into two key components:

  • Outcome – whether the outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work
  • Purpose – the R&D is conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved materials, products, devices, processes or services).

Now, this may seem heavy for someone new to the method but should be easy to respond to.

In fact, the R&D Tax Incentive Application is broken down into four sections that allow you to respond exactly to this.

 

How does this apply to each section?

In the second, third and forth sections of the R&D Tax Incentive application, you will need to respond to:

  • New knowledge generated – as the legislation outlines, you should be providing examples and information as to how this project will generate new technical knowledge through its completion
  • Unknown outcomes – as the legislation outlines, you should be able to provide examples as to why the work must be tested to be proven, i.e. you need to experiment
  • Core activities – provide details and outlines of how you tested and proved/disproved your concepts

 

Have a simple R&D project?

R&D Tax Incentive Application

Worked Example Included

 

Word economy and character restrictions

As with most government applications, each section has a strict limit on the amount of content that can be included.

While many are word limits, the R&D Tax Incentive Application is a character restriction (with spaces).

These scale from 4,000 characters (New Knowledge) to 2,000 characters (Unknown Outcomes).

It’s important to ensure you can succinctly break down your work, as this is your formal, first chance to get it right and avoid a Request for More Information.

 

Evidence and attachments

The R&D Tax Incentive Application will allow for the inclusion of attachments as a way to further evidence your statements.

It is, in most cases, not worth including additional information.

Your application is assessed on the merit that you can provide simple descriptions of what you are achieving—most times the attachments will not even be viewed.

However, it is advisable to keep this additional information for a technical audit of the project.

 

What is the review process?

R&D tax incentive applications are reviewed by AusIndustry upon receipt.