Reduce your pain!
How to prepare for a Review of your R&D Tax Incentive application
AusIndustry and the Australian Tax Office jointly administer the R&DTI program
AusIndustry reviews the application against the legislated criteria for eligible core and supporting activities.
The ATO reviews the application for eligible expenditure.
After you have lodged an RDTI application and the associated Company tax return you may receive questions about the R&D activities or the expenditure claimed. If you are not prepared this process can be expensive, time-consuming and very painful.
The best preparation is to submit the best possible R&D Tax Incentive (RDTI) application. The better the application the lower the pain! If your application is poorly written and if you have not organised your supporting documentation then you will have to work extra hard to provide a satisfactory response.
Preparation is akin to a decision tree. It should start when you first think the R&DTI is applicable for your company’s situation.
At a first pass preparing an R&D Tax application may look complex and daunting.
ITG will break down the process so that you make the best choices and achieve your goal.
It is preferable to prepare before the claim year. Let’s assume you have;
read the AusIndustry Guidelines about existing and new knowledge, and
reviewed the public domain knowledge relevant for your R&D.
Let’s also assume that during the claim year your company has kept records of:
the R&D activities,
the time and expenditure associated with the R&D activities, and
who did the work.
The first point in the decision tree is:
How much effort to apply to the RDTI application?
While you might have an excellent R&D project that meets the eligibility criteria, if it is poorly described then it is harder to respond to the Review questions.
At ITG we see too many drafts that are poorly written and do not reflect the actual quality of the R&D activity.Even worse, are the drafts that simply copy text from the previous year's application!
The second point in the decision tree is:
How much effort to apply to answering the AusIndustry Reviewer questions?
When you receive the Review questions from AusIndustry or the Australian Tax Office, put it on the ‘Do Today’ pile and start the process to address the questions asked. Your R&D Tax consultant should be able to address the questions directly if you have a good quality application. You should have a meeting with them to review the response well before the deadline.
Pushing the Review questions to ‘low priority’ and waiting until the last minute to respond will limit the quality of your answers and risk further questions from the Reviewer.
Links to explain the review process can be found here:
Your decision-tree for the least painful R&D Tax Incentive Review
Your decision-tree for the least painful R&D Tax Incentive Review
Call or email ITG for a free 30 minute consultation.
0407 667 007
info@intechgrp.com.au