A glossary of terms for the R&D Tax Incentive:
Activity Review: An Activity Review is a stage of the risk review process where the department aims to obtain a thorough understanding of your registered R&D activities, and address outstanding issues identified in the Registration and Desk Review stages of the process. An Activity Review will generally include a site visit to your company.
Activity: An R&D activity you have registered (claimed R&D activity) or are proposing to register for the R&D Tax Incentive.
Advance Finding: A finding made by Innovation and Science Australia regarding a proposed activity by a company. This is usually done to confirm eligibility of the activity for the R&D Tax Incentive before a claim is made.
Contemporaneous records/documents: In the context of the programme, contemporaneous records or documents are documents that were created during the time when the R&D activity (e.g. the experimentation) was occurring or before the activity occurred in the case of planning documents.
Core R&D Activity: Experimental activities where the outcome of the activity can only be determined by applying a systematic progression of work and are conducted for the purpose of generating new knowledge.
Desk Review: A stage of the risk review process that is undertaken if the Registration Review stage does not satisfactorily resolve outstanding risks. This process involves a deeper analysis of the registered activities, and may involve engaging the company in order to clarify the information they provided in the registration process.
Directly Related: A proposed supporting R&D activity is considered ‘directly related’ to a core R&D activity if it has a direct, close and relatively immediate relationship with one or more components of the relevant systematic progression of work done in a core R&D activity. When assessing supporting activities for eligibility, you need to identify and record what that relationship is to the core activity. Activities that directly contribute to the conducting or evaluation of the core experiment are likely to meet this requirement.
Dominant Purpose: The ruling, prevailing, or most influential purpose for undertaking an activity. The dominant purpose does not need to be more important than all of the other purposes combined, but it does need to be the most important purpose of undertaking the activity.
Evidence: In the context of the programme, evidence refers to the contemporaneous documents and records that were created when the experimentation was being conducted or when it was being planned or when supporting activities were being undertaken.
Experiment: An event you set up and conduct to test an hypothesis.
Findings About Applications for Registration: A decision made by Innovation and Science Australia regarding the eligibility of activities described in an application for registration of R&D activities for the R&D Tax Incentive.
Finding: A decision on eligibility for the R&D Tax Incentive issued by Innovation and Science Australia.
Hypothesis: A hypothesis is a statement that can be proven right or wrong by conducting an experiment. The hypothesis reflects a particular technical or scientific idea and is commonly expressed as a relationship between variables (or technical features) which can be proven or disproven. The hypothesis is the idea being investigated through the systematic progression of work. The hypothesis will generally direct the design and conduct of the experiment, observation and evaluation.
Integrity Assurance: In the context of the programme, the delivery of the programme in such a manner that best supports the programme objectives while maintaining effective compliance.
Internal Review: If you disagree with a Post-Registration Finding or an Advance or Overseas Finding, you can apply for an Internal Review of the decision. The Internal Review is conducted by a different departmental officer in a different office to the officer who conducted the original Finding.
Interpretive Guidance: Interpretative guidance products are designed to help you interpret and apply the provisions of the Legislation to your particular circumstances.
Legislation: Legislation of the R&D Tax Incentive refers to Division 355 of the Income Tax Assessment Act 1997 and Part III of the Industry Research and Development Act 1986 and associated regulations as most recently amended.
Overseas Finding: A finding made by Innovation and Science Australia regarding a proposed activity by a company, which will be undertaken outside Australia (or its external territories). This is required in order to claim expenditure for R&D activities being undertaken overseas.
Post-Registration Finding: A finding made by Innovation and Science Australia regarding the eligibility of R&D activities that have been registered for the R&D Tax Incentive.
Pre-Registration Review: An evaluation process where an application for registration by a company is analysed against possible indicators of non-compliance risk by a departmental officer.
Programme: The R&D Tax Incentive
Notional Deduction: An amount you can claim under the R&D Tax Incentive.
R&D: Research and Development
Registration Review: An evaluation process where a registration or registrations of a company is analysed against eligibility criteria by a departmental officer.
Registration: An application by a company providing details of the R&D activities they have undertaken in a given income year that has been accepted by the department. Note that a registration does not prove eligibility for the R&D Tax Incentive.
Research Service Provider: A registered organisation that under section 29A of the Industry Research and Development Act 1986 that has the appropriate scientific or technical expertise and resources to perform R&D on behalf of other companies.
Risk Review: The compliance activities that the department undertakes to check for non-compliance of applications for registration for the R&D Tax Incentive. This is done at either at the pre-registration or post-registration stage. The activities include: pre-registration reviews, registration reviews, desk reviews and activity reviews.
Significant scientific link: An overseas activity has a significant scientific link to a core R&D activity conducted solely in Australia if that Australian core R&D activity cannot be completed without the overseas activity being conducted.
Supporting R&D Activity: Activities that directly relate to core R&D activities. If the supporting activity is an excluded activity or produces goods or services, or is directly related to producing goods to services, the activity must be undertaken for the dominant purpose of supporting a core R&D activity.
Systematic Progression of Work: For the purposes of the R&D Tax Incentive, a systematic progression of work is a coordinated body of work that proceeds from hypothesis to experiment, observation and evaluation and leads to logical conclusions.
Targeted Guidance: Guidance products for a specific audience – for example SMEs or companies in a particular industry or sector.