R&D Tax Incentive Consultant
What is an R&D Tax Consultant?
An R&D Tax Consultant helps you to prepare and lodge and R&D application with AusIndustry. This will enable you to get a rebate back on your R&D costs.
Why are R&D Tax consultants needed?
Despite the Government’s efforts to cut red tape, R&D Tax Incentive
applications still take a long time to write and prepare. They can also be complex.
What is the main issue?
We find there is often a large difference between what the Government defines as R&D and what businesses regard as R&D. So, it is easy to get wrong.
What do R&D Tax Incentive consultants do?
An R&D Tax Incentive consultant makes sure that you are compliant with the Income Tax Assessment Act 1997
in particular Division 355 – Research and Development
. Basically, we identify eligible R&D activities and identify eligible R&D costs.
Need some tips on lodging an application?
What are the main outputs from an R&D Tax Consultant?
An R&D Tax consultant will produce two main documents:
- R&D Activity Registration – This is the R&D application lodged with AusIndustry
- ATO R&D Tax Incentive Schedule – This is what goes to your accountant that includes the R&D details.
Can you do it yourself?
Like most things you can do it yourself if you have enough time—the R&D Tax Incentive is designed as a self-assessed application. AusIndustry have released a 48-page ‘The R&D Tax Incentive A Guide to Interpretation’ and regularly conduct 2 hour information sessions. But you need to determine how long it will take and what the risks are to getting it wrong. Many companies have been fined by the ATO for putting in an ineligible claim.
Why doesn’t my accountant prepare the R&D tax incentive application?
While the R&D Tax Incentive is prepared by tax advisors
, typically R&D Tax incentive consultants are scientists or come from STEM backgrounds. Accountants can prepare some of the R&D Tax Incentive information, but 95% of the work is non-financial. They need to understand the scientific experimentation process, things like hypothesis testing. So, most accountants leave it to specialists who understand the technical nature of research and development. R&D consultants still work with accountants to include the R&D Tax Incentive schedule into the Income Tax Return. So, you keep your accountant, we just do the R&D bit.
What are some of the complexities?
The process on the surface looks straightforward, but there are a few technical components that make for a good application. Things like:
- Legal R&D definitions
- Government interpretation of the R&D act
- Analysis of the company technical information
- Drafting experimental plans
- R&D interview process
- Creating R&D budgets
Need some tips on lodging an application?
Do you need a consultant?
Legal R&D Definitions
As with every field dealing directly with the government, there is set legislation to work within. The R&D Incentive is no different. The scientific method is outlined in very defined terms in the legislation, which is a fairly accurate representation of the method used academically. However, the government’s interpretation and application of this is different.
Government interpretation of the R&D Act
Knowing what the current Government opinion is on certain industries and how they apply to this guidance and legislation is where the R&D consultant comes in. Knowing, for example, that certain software activities have been deemed not experimental by the government, is knowledge the R&D consultant will know. Understanding how the method and the guidance should apply to phrasing and presenting the development work of, say, a manufacturing claim would be another. The detail in each industry—and each project—requires certain knowledge of contemporary interpretation of the legislation and official guidance.
Analysis of the company technical information
Often, companies will have brilliant technical staff but find it hard to explain their work in simple language that a government official could understand. It is often not enough to have your CTO complete the R&D application. Simply describing the project and the product features will not be enough to satisfy the scientific method framework. The language to meet the legislative interpretation is quite specific and needs to be about experiments.
Drafting Experimental Plans
There are four sections within the application:
- Technical Objectives
- New Knowledge
- Unknown Outcomes
- Core Activities
Knowing how to respond to each section is a matter of understanding exactly what is being asked of you—this isn’t usually clear from the section’s description. This is all about the government’s definition of “experimentation”. This is where the R&D Tax Incentive consultant comes in.
R&D Interview Process
We meet with you, scope the technical work, research the project, draft a technical plan based on our conclusions and work with you to refine something both technically accurate and appropriate in the context of the R&D Tax Incentive. Further, R&D consultants provide the much-needed knowledge of distilling which work is eligible and which work is not. It is extremely common for companies applying themselves to misunderstand definitions and over-include activities. Not everything you do is experimental, and knowing what is and isn’t is a matter of technical analysis, not opinion.
Creating R&D budgets
It may seem obvious what financials should be included, but this is the biggest issue applicants run into. Accurately dividing your time between R&D and standard business is a mistake that causes most repayments to be made to the ATO. Meticulous attention needs to be paid to identifying the technical activities. Knowing how to include all relevant costs, while still adhering to R&D Tax Incentive guidelines is difficult without strong knowledge of the Incentive’s parameters.
Expert R&D Tax Incentive Consultant
Basically, you want the most out of your claim, we know how far you can responsibly push it. Our expert knowledge means we know what you can and can’t claim. We aim to simplify the Incentive application process, so that you can concentrate on running your business. Also, If you are planning to pay someone to help you prepare and lodge your tax return or R&D tax incentive schedule, you need to make sure they are a registered tax agent.
How to choose an R&D tax Incentive consultant ?
Things to check with your R&D tax incentive consultant :
- Are they a registered tax advisor?
- How many lodgments have they made?
- How many AusIndustry reviews have they had?
- How many ATO audits have they had?
- How much work are you required to undertake?
- Can they provide evidence of previous R&D plans?
- Do they have several referees or client testimonials?
- Do they have feedback (like Google reviews) on the quality of their work?
- Confirm how long it will take to complete the application?
- Which consultant will be undertaking the work? What is their experience?
- What are their standards on claim evidence? Are they high?
- Is the consultant up-to-date with current government standards?
- Are they on the AusIndustry/ATO State Reference Group?
Find Out How To Maximise Your Rebate!
R & D Tax Consulting
We are based in Melbourne at The Cluster
(17/31 Queen St, Melbourne VIC 3000)
. But many of our clients are based interstate. It is pretty these days with email, phone and skype etc. Send me an email to [email protected]
if you want to catch up.