TaxTrex
TaxTrex

TaxTrex – are you compliance ready?

The R&D Tax Incentive is a self-assessment program, therefore claimants are responsible for determining whether their activities and expenditure meet the eligibility criteria of the program. It is the responsibility of claimants to retain adequate records to be compliance ready.

Are You Compliance Ready?

Records must demonstrate to the ATO and AusIndustry that:

  • eligible R&D activities have been carried out (both core and supporting activities)
  • the incurred expenditure relating to these activities; and
  • all R&D activities and related expenditure met all other legislative requirements under the R&D Tax Incentive Program.

Claimants must also have records that verify:

  • the amount of expenditure incurred on R&D Activities;
  • the nature of the R&D activities; and
  • the relationship between the expenditure and the R&D activities.

Good management of records enable claimants to self-assess their eligibility, meet compliance obligations and also identify further areas that may be eligible to access the benefits of the R&D Tax Incentive. Maintaining well managed documents also allows claimants to minimise costs that may be associated with an AusIndustry R&D Tax Incentive risk review or finding.

In the case of Ozone Manufacturing Pty Ltd v Commissioner of Taxation [2013] AATA 420, the AAT handed down a decision that Ozone had not maintained adequate records to substantiate its R&D claims. A formal audit of the claim concluded that Ozone did not have the sufficient evidence to support the claim. Questions were raised about the validity and nature of employee timekeeping and the lack of time sheets to substantiate the actual time spent by employees on related R&D activities. The decision by the AAT in this case is a reminder to claimants that adequate records must be maintained to support claims.

Time stamped documents can help claimants defend their claim in the event of an Audit. A principal component of the R&D Tax Incentive is that substantiation must be contemporaneous, placing the onus on you to provide documentation.

TaxTrex’s three annual surveys are time and date stamped, which means the scientific process is captured as it occurs. These time-stamped documents show the iterations of the projects over time, which will help you defend your claim in the event of an audit. TaxTrex also provides a secure and centralised document storage facility allowing you to upload and store relevant files to ensure claimants are compliance ready.

Why TaxTrex?

How does TaxTrex work?

TaxTrex is based on academic research conducted by Swanson Reed and works by issuing three surveys at regular intervals during the year.

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 surveyws will be useful in defending a claim in the event that is reviewed or audited.