TaxTrex
TaxTrex

R&D Tax Incentive – software eligibility

Since the tech boom, there has been a huge increase in the amount of new and innovative software developments. These software solutions are generally developed to solve a problem, or create an alternative solution to current solutions. It is imperative that software developers are able to determine whether there solution is either standard software develop or if it is generating new knowledge when claiming the R&D Tax Incentive. The following guidelines may help developers:

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  • R&D is typically done where there is developed on, or interaction with, a new or undeveloped platform or language that requires iterative experimentation to achieve functionality/compatibility objectives
  • Where you are interacting with a 3rd party software that doesn’t provide adequate documentation or API’s to interface with and requires experimentation to develop the link.
  • If a data interchange has been developed between a legacy system and a new system, ie a legacy database and SQL where there are fundamental incompatibilities in the transfer of data.
  • If an experimental user interface has been created and requires extensive testing to determine the optimal interface.
  • If new algorithms have been created to solve a calculation.

Record keeping for the R&D Tax Incentive

TaxTrex assists with the creation and verification of the required documents to evidence your R&D tax claim. The R&D Tax Incentive requires records to be kept to provide evidence that the claimed activity is occurring and that it is experimental in nature. Together with Swanson Reed, TaxTrex can assist in the assessment of your existing record keeping process and provides a way to ensure your R&D tax claim is compliance ready in the event of an ATO audit.

Examples of substantiating documentation for a software project include:

  • Design and conceptual engineering drawings
  • Design documents for system architecture and source code
  • Testing protocols
  • Results or records of analysis from testing / trial runs
  • Patent application number

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