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MJA Updates

Newsflash! Software R&D Claims Are OK According To Government Guidance A Good News Story

June 10, 2021 Kris Gale

If you have followed the R&D Tax Incentive (RDTI) in the past five years, you will not have been able to avoid the controversy surrounding the eligibility of software R&D. The issue has been as ubiquitous as the expressions “new normal”, “unprecedented times”, “we’re all in this together” and “no sugar, thanks”.

A little over two years ago, there was a widespread belief that software R&D in the main did not qualify for the RDTI based on the devastating AusIndustry/ATO audit experiences of a number of taxpayers. This was despite the fact that the legislated definition of R&D activities remained unchanged since its introduction in 2011 (and does so to the present day). The situation was truly alarming as software development has driven an enormous slice of Australian innovation in the past decade.

Well, thankfully, off the back of case law, Ombudsman reports and public debate, the eligibility of software R&D under the RDTI is once again commonly accepted. And this position is certainly confirmed by the recent release of a draft software guide for consultation by the Department of Industry, Science, Energy and Resources.

The draft is a marked improvement on previous versions released in the market in the past half dozen years and includes a case study, something that has been absent from guidance material for a long time.The draft Guide can be accessed at the following link: https://consult.industry.gov.au/ausindustry/rdti-software-development/user_uploads/software-development-activities-and-the-r-and-d-tax-incentive.pdf

Submissions may be made to the RDTI Branch of the Department and an Online Survey is offered as an option. Full details can be found here.

Responses are due by Friday, 18 June.

As the old expression goes, given the importance of this guidance to the future of the new RDTI that commences on 1 July, the more feedback the merrier.

MJA will be submitting and we are more than available to discuss this matter with you in greater detail.

Please do not hesitate to contact Kris Gale on 02 9810 7211 or email kris.gale@mjassociates.com.au

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