TaxTrex
TaxTrex

Call to reform the R&D Tax Incentive for startups

Australia’s peak startup industry body StartupAus has named former diplomat Alex McCauley as its new chief executive, with reform to research and development tax incentives his first order of business.

startup-business-concept

This leaves many startups questioning, is my startup eligible for the R&D Tax Incentive? The R&D program has 5 steps:

  • Assess if you have an eligible entity (check your eligibility here)
  • Conduct eligible R&D activities
  • You will need to write an R&D project plan to support your application (If you haven’t done this before, please contact Swanson Reed for more information). First time applicants generally having trouble getting the base project plan together for the first year’s claim but once you have this it will form a template for your business to use for subsequent applications.

Eligible Core R&D activities are experimental activities:

  • is based on principles of established science; and
  • proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions
  • Register with AusIndustry
  • Registrations are now open – you will need to apply within 10 months of the end of your income year, so if you have eligible R&D expenses that your business incurred during the 2015 financial year (1st July 2014-30 June 2015) you need to apply before 30 April 2016.
  • Ensure your books are in order
  • Use a Tax Agent that has experience in accounting for R&D Tax Incentives. Structure your company expenses efficiently to help maximise your eligible expenses.
  • Make payments for all eligible expenses in the year of the claim – i.e before June 30.
  • Get your filing in order. Expense receipts, travel diaries and any other relevant documentation that maybe be required in the event of an audit to substantiate your claim will need to be kept safely.
  • Lodge your company tax return with the ATO
  • Talk to an accountant as soon as you make the decision to apply for R&D tax incentives.
  • Seek advice from your accountant to ensure your business is prepared to lodge it’s return and understand how the timing of the application submission will impact forecasting your cash flow.

Need help with a claim?

82% of accountants think that preparing R&D claims without specialist help is too risky. TaxTrex allows you to prepare R&D claims with little or no risk.