Australia's R&D Tax compliance: Calm before the Storm

Dear R&D Tax Incentive (R&DTI) Claimants, congratulations on the recent October 2020 Federal Budget announcement that the refundable R&DTI permanent difference rate will increase 2.5%, from the current 16% to 18.5% and eligible companies can still cash out their corporate tax losses. However, the elephant in the room will be the dramatic increase in AusIndustry and Australian Taxation Office (ATO) R&DTI programme assessment and audit activity scheduled for the next few years (2021 to 2023). These rumblings have been identified and communicated in:

·      Numerous R&DTI State Reference Group meetings.

·      Australian National Audit Office (ANAO) planned 2021 focus areas.

·      AusIndustry’s recent guidance materials.

·      Numerous presentations and briefing sessions provided by AusIndustry and ATO.

·     IP Australia's closer integration with AusIndustry.

·      R&DTI Service Providers (i.e. Accountants, Law Practices and Boutique firms) blogs and newsletters.

·      Media commentary - AFR, Innovation Australia, Sydney Morning Herald, The Australian, Association and Organisations, etc..

·      Big 4 Accounting firm, recently, wining a tender to revolutionise the Industry department’s “services to support research and development tax incentive ICT reform projects”.

This dramatic increase in R&DTI administrator assessment and audit activities is the calm before the storm! R&DTI claimants need to prepare their compliance and assurance documentation. One of the biggest risks to a claimant, is providing substantiation of documentation addressing the requirement that a claimant must seek to resolve a technical unknown with knowledge and that a competent professional in that field cannot know or determine in advance of experimentation.

TrueIP has developed a R&DTI Knowledge insight-as-a-service (IaaS) modeled on AusIndustry’s Record-Keeping and R&D Planning guidance material (https://www.business.gov.au/-/media/Grants-and-programs/RDTI/Research-and-development-tax-incentive-compliance-readiness-record-keeping-PDF.ashx?sc_lang=en).

TrueIP’s R&DTI Knowledge Assessment assurance tool investigates:

·      Global Patent landscape incorporating: new or improved products, processes, devices, systems, designs patentability; Top 10 competitors and their clustering around the claimant's IP; Licensing potential partnerships and opportunities; Global expert candidate pool; etc.

·      Identifies a starting point to discover whether existing know now exists and how to access it before proceeding down an expensive and resource challenged series of technical rabbit warrens;  

·      Knowledge similarities and uniqueness; and,

·      Non-patent relevant references from Global Academic Libraries; Scientific peer review sites; Journal Articles; and, Industry Association and Organisation resources.