Outsourcing research and development (R&D) activities can be an effective strategy to leverage specialist skills, manage costs and accelerate the pace of innovation. However, if you’re planning to claim the R&D tax incentive in Australia, you need to ensure your outsourced work meets specific eligibility requirements.
Location of Work
First and foremost, it’s crucial to understand that the R&D work must be conducted within Australia to be eligible for the tax incentive.
- Overseas Outsourcing: Often, R&D activities are outsourced overseas, which unfortunately are ineligible for the Australian R&D tax incentive.
- Mixed Location Projects: If your project involves both local and offshore components, you’ll need to accurately apportion the costs related to Australian activities to maintain eligibility.
Ownership of Intellectual Property
The ownership of the intellectual property (IP) generated from the R&D activities is another pivotal factor in determining your eligibility.
- Clear Contract Terms: Ensure your contract with the outsourcing partner explicitly stipulates that your business retains the IP rights.
- Risks of Unclear IP Ownership: A failure to establish clear IP ownership can put your tax incentive claim at risk.
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Detailed Invoices and Proposals
Detailed record-keeping is vital to the claiming process. Invoices and proposals from your third-party developer should provide explicit details of the R&D work performed.
- Specific Work Details: These documents should specify the activities undertaken, the time spent, and the costs involved, all linked to the R&D work.
- Strengthening Your Claim: Having invoices and proposals that explicitly discuss R&D activities is ideal for fortifying your claim’s basis.
Strengthening Your R&D Claim: Going the Extra Mile
To really solidify the foundation of your R&D claim, consider implementing the following measures:
- Timesheets: Encourage your third-party provider to maintain timesheets that outline how the R&D costs are spread across different activities, including both core and supporting activities.
- Availability for Discussion: Arrange for your third-party provider’s staff members to be available for discussions with your R&D consultant. This can significantly assist in identifying and discussing eligible core R&D activities, which may not be explicit in proposals or invoices.
Remember, while outsourcing R&D activities can provide considerable benefits, it’s essential to maintain control over the project’s direction and retain the necessary documentation to substantiate your claim. By adhering to these guidelines, you’ll ensure you’re in a strong position to take full advantage of the R&D tax incentives available.
Why Choose Bulletpoint?
Bulletpoint is your trusted partner for navigating the complexities of the R&D tax incentive in Australia. We’re a Melbourne-based consultancy, led by the country’s top-rated R&D tax consultant, and our expertise is based on a decade of hands-on experience.
We have a history of success, with more than 500 R&D claims lodged to date, demonstrating our consistent ability to deliver favourable outcomes for our clients. Our clear, personable approach takes the complexity out of the process, helping you understand the intricacies of R&D definitions from a government perspective.
Our dedication and passion are reflected in the testimonials of our clients who appreciate not just our expertise but also our commitment to their success. We’ve been acknowledged for unveiling grant opportunities and making the R&D claim process more manageable and less daunting.
We take pride in our 4.8-star rating based on over 250 Google reviews, a testament to our unwavering commitment to excellence. Our quest for improvement is never-ending; we continuously learn from our experiences and client feedback.
At Bulletpoint, we’re not just about getting the job done. We aim to align your perception of R&D with government eligibility criteria and help you maximise your rightful incentives.
So, if you’re seeking proven expertise, a successful track record, and a consultative approach that blends professionalism with approachability, look no further than Bulletpoint. We are more than ready to guide you through your R&D tax incentive journey, ensuring not only a successful outcome but also a pleasant experience.
Ready to unlock your business’s full potential with R&D incentives? Book a meeting with us or call 1300 658 508. Let’s begin this rewarding journey together.