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Substantiating an Experiment Commercially - The R&D Tax Conundrum

Published on 05 Feb 2013 | Took place at City West Receptions, West Perth , WA

    The Research and Development (R&D) Tax Incentive is an entitlement program that allows businesses to offset some of the costs of conducting R&D, in the form of a deduction on their annual business tax returns. It replaces the R&D Tax Concession with effect from 1 July 2011 and provides more generous support for businesses.
    In 2012, the Administrative Appeals Tribunal (AAT) decided on two cases regarding the substantiation of tax claims under the Concession program. The two decisions affirmed that the activities claimed did not satisfy the eligibility to be R&D activities. While the recent AAT decisions deal with applications under the former Concession program, they contain information about the level of documentation AusIndustry and the Australia Taxation Office (ATO) require of business claiming under the current Incentive program.
    This presentation covered the following points:
  • introduction to R&D Tax Incentive and the new eligibility criteria
  • explanation of core and supporting activities: what they are and how they differ
  • the problems with substantiation requirements as a result of the segmenting of an R&D project into individual activities for the purpose of assessing tax offset eligibility
  • a proposed solution of how to claim under the new scheme and how much documentation is enough, based on recent AAT decisions.

Individual sessions

Substantiating an experiment commercially - The R&D tax conundrum

Author(s):  Adam ROGERS,  Damian SMYTH,  Gloria LIM

This paper covers:

  • introduction to R&D Tax Incentive and the new eligibility criteria
  • explanation of core and supporting activities: what they are and how they differ
  • the problems with substantiation requirements as a result of the segmenting of an R&D project into individual activities for the purpose of assessing tax offset eligibility
  • a proposed solution of how to claim under the new scheme and how much documentation is enough, based on recent AAT decisions.
Materials from this session: