February 2016 special edition

Administrative Appeals Tribunal (AAT) decisions

Two decisions made by the AAT under the R&D Tax Incentive

The Administrative Appeals Tribunal (AAT) recently decided the first two matters under the R&D Tax Incentive.

In these decisions the AAT affirmed Innovation Australia’s published guidance that:

  • the entity registering must have ‘the purpose of generating new knowledge’ and ‘the purpose’ means a substantial or significant purpose; and
  • activities cannot be found to be eligible without records of the activity.

An understanding of the key principles in the two judgements is of critical value to companies participating in the R&D Tax Incentive and their advisors. Summaries of the key outcomes and links to the full judgements are available through the hyperlinks below.

Registration deadline is april 30

Registrations for the R&D Tax Incentive closing soon

Registration is a critical first step in accessing the R&D Tax Incentive. Companies must register their R&D activities with AusIndustry before they are able to claim the benefits of the R&D Tax Incentive. The deadline for lodging an application for registration is ten months after the end of a company’s income year. So for companies with a standard income period of 1 July 2014 to 30 June 2015 lodgement of their registration with AusIndustry is due by 30 April 2016. As 30 April 2016 falls on a Saturday companies are able to lodge on Monday 2 May 2016. If an application for registration is received after the deadline, it is deemed a late application and will not generally be accepted.

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Reminder - submissions close soon

R&D Tax Incentive Review

The Government’s National Innovation and Science Agenda, launched on 7 December 2015, initiated a review of the R&D Tax Incentive, jointly chaired by Mr Bill Ferris AC (Innovation Australia), Dr Alan Finkel AO (Chief Scientist) and Mr John Fraser (Secretary of the Treasury) under the auspices of Innovation and Science Australia.

The Government has asked the Review to identify opportunities to improve the effectiveness and integrity of the R&D Tax Incentive, including by sharpening its focus on encouraging additional R&D expenditure.

While earlier stakeholder consultations are being considered by the Review, interested parties may provide additional input to the Review Panel. An Issues Paper has been developed by the Panel to aid this process and is available for input until Monday 29 February 2016.

AusIndustry and the ATO

Compliance is on the agenda

AusIndustry works closely with the Australian Taxation Office (ATO) in the administration of the R&D Tax Incentive. This means sharing information relating to the proper administration of the programme and collaborating on shared compliance concerns. As a result of this collaboration the two regulators jointly developed content to inform participating companies and their advisors of areas of concern within the programme. This content was released through special editions of the R&D Tax Incentive Information eBulletin.

On 26 October 2015, AusIndustry released a special compliance edition of the eBulletin which included:

  • A jointly developed taxpayer alert and accompanying media release on correct claiming in the broad-acre farming industry.
  • Guidance on company and advisor obligations to ensure that:
    • the law is applied correctly
    • activities are self-assessed correctly, and
    • information provided to the regulators is honest and accurate.
  • Common areas and industries where self-assessment errors are occurring.

A second special eBulletin was released on 11 January 2016 highlighting a jointly developed compliance article and case study. The documents remind participants and their tax agents that:

  • registration comes with the obligation to follow the rules and register only activities and claims for expenditure that are eligible; and
  • registration is not a guarantee of eligibility - the R&D Tax Incentive is a self-assessment programme and eligibility checks may be performed after a registration is made.

Special edition eBulletins contain important information for participating companies and their advisors. If you are an advisor to, or a participating company in, the R&D Tax Incentive make sure you keep up to date with special edition eBulletins to help you minimise your compliance risks. 

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