Guide to R&D Tax Concession Updated – R&D Tax Concession Rulings Withdrawn
AusIndustry and the ATO have been jointly publishing a Guide to the R&D Tax Concession for some years now.
On 6 August 2008 the ATO released an update to Part C of the Guide to the R&D Tax Concession covering Expenditure on Research and Development. This completes the June 2008 update (Version 4.1) process as Part A (Introduction) and Part B (Research and Development Activities) were released by AusIndustry recently.
Changes incorporated in the updated guide include:
- Changes to the legislation on the Tax Offset including extending right of appeal to offsets, extend the time for claiming an offset, apply the $20,000 minimum,
- Improve the allocation of the 175% incremental concession between companies within the group
- Extend the 175% incremental concession to Australian subsidiaries of multinational enterprises (MNE) where the R&D activities are on behalf of the MNE.
- Other general changes to bring the Guide up to date with current legislation and ATO views.
In the process of releasing the update, a number of older rulings were withdrawn from this date. These are:
- IT 2442: This is an early general ruling on R&D expenditure
- IT 2451: This ruling discusses investor funding of R&D and “on own behalf” issues
- IT 2552: This ruling gives a detailed guide to costing R&D expenditure.
These 3 rulings are pre-1992 rulings. As such they only gave guidance and were not legally binding on the ATO. In the Notice of Withdrawal for each ruling the ATO states that “material in these rulings which is current is now included in Part C of the Guide to the R&D Tax Concession”. “The withdrawal of [these rulings] does not mean that the views expressed in that Ruling have changed.”
However, their replacement with the Guide rather than new public binding rulings fails to maintain or improve certainty for taxpayers. Given that the ATO has recently sought public comment on a potential ruling on “Guaranteed returns to investors” (s73CA) we can expect new rulings in due course. Notably, IT 2635 on risk provisions and syndicated R&D as the last pre-1992 ruling was not withdrawn.
We are currently completing a detailed review of the updated Guide.
Contact us if you would like more information.
