Tax Transparency Measure
- The Australian Taxation Office (ATO) will soon be required to publish information about R&D companies and the R&D expenditure claimed by those companies, 2 years after the end of the financial year of the claim.
- The first publication of this information is for R&D claimants that lodged a 2022 company tax return with a R&D Tax Offset and their income year began on or after 1 July 2021.
- The ATO expects to publish this information in September 2024 and will then be publishing this information on an annual basis.
- The ATO is publishing this information to improve public accountability for R&D claimants and to encourage voluntary compliance with the R&D program.
- The information that the ATO is looking to first publish will be based on data from the 2022 company income tax return, including:
- Name of the company claiming the R&D tax incentive
- Australian business number (ABN) or Australian company number (ACN)
- The company’s total expenditure on R&D (known as total notional deductions claimed – label Z in Part A of the R&D tax incentive schedule) less any feedstock adjustments (label B in Part B of the R&D tax incentive schedule).
- More information about this new requirement is available on the ATO website link About the R&D program | Australian Taxation Office (ato.gov.au).
Integrity Rules
- The ATO has identified ongoing issues with a number of the integrity rules of the R&D tax program.
- The ATO is seeking voluntary compliance with these and other integrity rules of the program and have highlighted and provided commentary on the following areas:
- R&D expenditure to associates
- Conducted for
- Aggregated turnover
- Overseas expenditure
- Expenditure not at risk.
- More information is available on the ATO website link Clarifying R&D program integrity rules | Australian Taxation Office (ato.gov.au).
Joint Review of Claims
- The Department of Industry, Science and Resources (DISR) and the ATO are conducting a joint compliance reviews of a random selection of R&D claims made for the 2022 tax year.
- The purpose of this review is to:
- Assess the eligibility of registered R&D activities and expenditure
- Provide vital information on the integrity of the program
- Inform the development of updated, contemporary risk indicators for use in future integrity assurance activities.
- The review commenced in October and is occurring alongside other integrity and compliance activities. It is expected to be completed by mid-2024.
- Our fees to attend to any review activity conducted by the ATO can potentially be claimed under tax audit insurance if you have a policy in place.
Please contact your R&D tax advisor at Prime if you have any questions in relation to the above.
