February 26, 2019 by Ben Thompson
The guidance released by AusIndustry last week was addressed to people who have been doing the wrong thing; willingly or through ignorance of R&D legislation. There is nothing new in the guidance for those who have solid understanding of the scientific method; who claim only activities which have clear and precise technical uncertainties and which the solution is already documented in internal code repositories.
AusIndustry are concerned that software companies are claiming R&D for activities which are ineligible, either because they are focussed on commercial uncertainties or are claiming “whole of project” costs.
The criteria for eligibility of activities and expenses remains unchanged. Legislation has not changed, nor has the government’s interpretation. What has changed is that they are now enforcing legislation and knocking people back based on incorrect activities (and costs as a flow-on).
The newly released guidance docs, of which there are two, updated what was already in the public domain with more prescriptive examples of the types of acceptable supporting documentation. Maintaining adequate contemporaneous records has always been a legislated requirement.
This new guidance spells out some examples of what evidence may be presented to validate the eligibility of R&D activities. This new guidance attempts to address ongoing complaints from R&D consultants and applicants who are still unclear what is and is not R&D.
Additional guidance from AusIndustry, and the ATO, is never a bad thing. The more dodgy claims that are flushed out the better for maintaining the integrity of a vital programme that benefits the entire economy and the future of Australia.
TechLever does R&D Tax work 24/7 and our interpretation, and application against company specifics, has never been unclear. Our unblemished audit history speaks for itself. If you are uncertain about the veracity of your R&D, or whether you are meeting legislated guidelines for activities or internal documentation, reach out. Knowledge is free.