R&D Regulators Getting Tough

The R&D Tax Incentive is a really great program for eligible Australian companies who are developing novel products, processes and services via systematic experimentation.

But this is not ‘easy money’. It is critically important that companies keep the right records at every stage of their R&D. Compliance creep makes those claims ever more complex and risky. And AusIndustry’s evolving definition of eligible R&D activity is a lotnarrower than most reasonable researchers’ expectations.

Just look at the explosion in AAT cases – companies fighting the rejection of their R&D claims. AusIndustry and the ATO stated in their latest roundtable that “as at 26 October 2020, there were 24 matters before the Administrative Appeals Tribunal (AAT) seeking a review of RDTI program decisions”. That’s more than all of the previous 8 years of the R&D Tax Incentive combined!

Many of those companies are going to face financial hardship when they are inevitably forced to repay R&D benefits received, plus penalties. (To the best of my recollection, no company has yet won an R&D Tax Incentive dispute at the AAT).

Getting R&D claims right is too difficult to leave it to chance. Seek the help of experts, most particularly those experts that look well beyond the numbers. Are they helping you keep the right records? Are they helping you articulate your R&D against the eligibility criteria of the program? Are they helping to manage the business risk arising from your claims?