Are you Considering R&D this year? There are Tax Incentives available.

by Vanessa Lovie 3rd of January, 2019

The Research and Development Tax Incentive scheme was established with the aim to boost competitiveness and improve productivity across the Australian economy. Companies were given a tax benefit to encourage them to engage in more research and development.

This R&D Scheme is considered essential for many startup businesses as this is the point that they invest in the establishment and growth of their business. The Scheme is said to account for about $3 billion in federal government expenditure each year.

According to the ATO, “Your eligibility to claim the R&D tax offset will also depend on where you are conducting your R&D activities and, importantly, what those activities are.”

Recently, the ATO and AusIndustry announced they would be reviewing many claims made under the schemed, focusing mainly on software.

“The ATO and AusIndustry are reviewing the arrangements of companies that are claiming the R&D Tax Incentive on software development projects where some (or all) of the expenditure incurred is on activities which are not eligible R&D activities”.

With the focus on developing new software, modifying existing software or acquiring and modifying off-the-shelf software.

As a result of this audit, many companies claims were rejected and they were made to repay the tax benefits they received as well as a penalty.

The Financial Review reported in December 2018 that start-up companies including the popular online service business, Airtasker, have been ordered to repay millions of dollars in funding received as part of the R&D scheme.