Review of R&D Tax Incentive Dual-Agency Administration Model

As part of the 2021-22 Federal Budget, the Government announced that the Board would undertake a review to evaluate the dual-agency administration model for the Research and Development Tax Incentive (R&DTI). The terms of reference contained in the set out, among other things, the objectives of the Review. 

The R&DTI is jointly administered by the Australian Taxation Office (ATO) and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER), with the ATO being responsible for the administration and processing of R&D tax offset claims, and IISA responsible for registering companies' R&D activities. The program is delivered by AusIndustry on behalf of IISA.

The efficient administration of the R&DTI depends on the clear delineation between the roles of the ATO and AusIndustry both in theory and in practice. In our members’ experience instances where the division of responsibilities between the two agencies has become blurred are common. A frequently cited example is circumstances in which the ATO has questioned a taxpayer’s eligibility, which is a matter for AusIndustry to determine.

A key concern raised is that the separation of responsibilities between the agencies has duplicated the compliance burden and costs for taxpayer when dealing with the ATO and AusIndustry separately. For example, our members have shared experiences of taxpayers being required to produce the same information to both agencies separately, even in circumstances where one agency already held the information subsequently requested by the other. These experiences give a perception of reluctance on the part of the agencies to share information with one another. It is not clear whether this is due to uncertainty within the agencies as to what information can be shared or for other reasons such as confidentiality and privacy requirements. The Tax Institute’sconcern is that the current model creates inefficiencies by duplicating the work required by both taxpayers and the two agencies.

The Tax Institute is of the view that the R&DTI should be administered in such a way that upholds the integrity of the regime, while giving taxpayers confidence and certainty that their claims will be dealt with in a timely, efficient and procedurally fair manner.

Submission prepared by:

The Tax Institute

Submitted to:

Board of Taxation Secretariat
The Treasury

For more information, contact:

Julie Abdalla, FTI
Tax Counsel, The Tax Institute
(02) 8223 0058