Using the R&D Tax Incentive to its best advantage requires specialist knowledge.
To unlock the benefit to your business, having experience on your side is essential.
I have to declare my interest here.
I have been a practising R&D Tax Specialist for more than 28 years so I am going to argue the case that not all accountants and tax agents are equal in this particular area.
Let me explain why.
The Research and Development Tax Incentive was designed with a number of goals in mind but the chief aim of making government investment for innovation more accessible to small business has worked.
The R&D Tax Incentive forces small business to invest up front but the benefit of a refundable tax offset has helped to significantly mitigate the risk and provide for ongoing investment.
The number of companies receiving help from the Australian government has swelled to beyond 13,000.
Over time, parliaments have tinkered with the original program. Changes made in 2011 saw participation greatly increase due to the introduction of a 45% uncapped cash refund on eligible expenditure for companies in tax loss with an annual turnover less than $20 million.
More tax agents are assisting with more claims but the quality of advice per applicant has apparently dropped.
The ATO and AusIndustry ran workshops to address the shortage of quality advice but these were shortlived. There has been a mushrooming of R&D tax agents charging “success fees” to register businesses for the incentive, only to push back the brunt of administration onto company accountants.
So what do I think you should be looking for in an R&D specialist?
- A good R&D specialist will ask you questions about your operation and the specific technical aspects of your research & development program.
- They have questions and advice about the way you are costing and tracking your R&D program with the emphasis on documentation.
- When it comes to lodging the claim, they apply the calculation rules correctly.
- They are diligent about connecting the technical activities in your claim with contemporaneous technical documents.
- They are capable of handling questions on your behalf should the Tax Office or AusIndustry decide to assess your claims.
The R&D Tax Incentive is a generous program and, as such, it can attract advisers of questionable quality.
Participants should expect to be audited within three to five years and the outcome of this visit depends largely upon the quality of service and advice you’ve received.
The R&D Tax Incentive requires someone who can support you at every stage of the claim, from registering to lodgement right through to assessment.
In my experience, most business owners appreciate their partnership with the Australian Government in growing their business and making it future-ready. They want to present an open book.
Is this an opportunity you want to explore?
For more information on the R&D Tax Incentive or to speak to a R&D specialist, follow this link. Download this Ebook. Join the conversation.