TaxTrex
TaxTrex

Is your R&D tax claim in risk of an audit?

The success of the R&D Tax incentive program is costing more than anticipated, resulting in the ATO cracking down on companies that are potentially abusing the scheme.

audit-magnifying-glass

Critics of the R&D Tax Incentive have expressed that some companies try to claim business as usual activities as R&D activities. The Tax Office has responded by announcing they will be undertaking formal audits and asking for additional information on claims that have not been properly substantiated to ensure:

  • what has been claimed as R&D is in fact eligible R&D activity as defined, and
  • that spending claimed to have been incurred on those activities has in fact been incurred on those activities.

Last year the ATO issued the following warning:

“We’re [ATO] working closely with AusIndustry to identify taxpayers involved in aggressive R&D tax incentive arrangements which may include tax avoidance and fraud. We’re concerned businesses and tax agents are following R&D consultant advice without substantiation of expenditure or objectively assessing the advice. It’s your responsibility to ensure your R&D tax incentive claims are correct before lodging:

  • all figures and details in the R&D schedules
  • all claims for R&D expenditure
  • that R&D activities claimed match your AusIndustry registration
  • expenses (for example labour costs) were incurred on R&D activities”

Many businesses are generally too concerned with maximising their claim, hence forgetting to protect it. As the risk of being audited increases, it is important businesses ensure they properly document their R&D activities as they occur. Additionally, internal systems and processes should be reviewed to make data collection and compliance more efficient.

How can we help?

TaxTrex provides tools to manage an R&D claim service in-house from initial assessment to the claim submission. Relevant information necessary for the R&D claim will be:

  • extracted,
  • time-stamped; and
  • securely stored.

The information gathered through the surveys will assist in substantiating the scientific process and purpose of conducted activities.

The reports generated from the surveys will be useful in defending a claim in the event that is reviewed or audited.

For more information please Contact Us