The R&D Tax Incentive: A Case Of Keep Calm And Carry On Claiming???

March 2, 2017 Kris Gale

The recent release of a series of ATO Taxpayer Alerts with respect to the R&D Tax Incentive (the Incentive)  (including a revised version of the software development alert published last Friday) comes on the back of a number of publications issued by AusIndustry in recent months. The documentation can be viewed at: https://www.business.gov.au/Assistance/Research-and-Development-Tax-Incentive/RnD-Tax-Incentive-Information-Bulletin/February-2017-edition

The flow of information has occurred as the market awaits the recommendations of the Federal Government regarding the ‘Triple F’ Review of the Incentive and has caught people somewhat on the hop. The result has been much speculation as to whether something has changed regarding the eligibility criteria that currently apply to the Incentive.

The short answer is no. In fact, the Triple F Report recommended the legislation with respect to the eligibility of R&D activities and R&D expenditure should not be changed for at least another five years (and what a good idea that is!) Taxpayers who have the appropriate protocols in place should continue their approach to the making of sustainable R&D claims.

And rather than just take our word for it, here is what an ATO spokesperson had to say in a recent interview with StartupSmart when asked about the impact of the software development alert:

“……the alert doesn’t represent a new law or a change to existing rules”, but rather it is “a reminder to businesses to be mindful of the activities which they might claim is a tax incentive”.

“As with any software development company, startups should take note of the warnings outlined in the recent R&D taxpayer alerts, to make sure any claims that are made match the legislative requirements, with proof that they are undertaking actual research and development as part of their business,” the spokesperson says.“Startups should ensure that activities are generating new knowledge or undertaking experimentation of new technologies; that the technical uncertainty being addressed by the activity is clearly identified; and that the activities claimed are directly related to supporting experimental activities.”

In short, keep calm, follow the legislation, which has not changed since 2011, and carry on your good claiming practices.

Should you wish to discuss this matter further, please do not hesitate to contact Kris Gale on 02 9810 7211 or email kris.gale@mjassociates.com.au