An important practical aspect for making a claim under the new R&D tax incentive regime is to appreciate the documentation and substantiation requirements administered by AusIndustry and the ATO. To assist, AusIndustry is now issuing guidelines to provide SME’s and their advisers with more clarity.

There are many precedents for Federal Government agencies interpreting the legislative intent, but equally no surprises when that interpretation is felt by some to be onerous or strict, even perhaps nullifying reform aspirations.

A general comment here is that, unlike the superseded R&D concession, legislation for the new incentive regime makes no stipulation about the form and content of documentation. Whereas the new incentive offers a more generous benefit than that previously available, the documentation requirements initially appear stringent with therefore greater risk that an application for registration or a subsequent claim may, after self-assessment, be contested on review.

Helpfully, AusIndustry’s principles for compliance readiness are:-

  1. That internal systems allow R&D documentation to occur as part of overall planning.
  2. That R&D activities are identified as they occur.
  3. That methodology for project evaluation is documented.
  4. That both technical and accounting staff co-ordinate their R&D responsibilities.
  5. That R&D activity and expenditure absolutely linked.

The imperative for R&D compliance, like never before, is to totally manage your activity throughout the financial year. The concept of having your tax agent prepare R&D documentation six months after year-end is less likely to succeed. Eundo assists clients to plan, monitor, record, document and calculate an R&D claim in real time; that is, act before R&D starts rather than after the financial year has ended!