If you performed eligible Australian-based R&D activities during the financial year ended 30 June 2023, the 30 April 2024 deadline to register your activities with AusIndustry is fast approaching.
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The R&D Tax Incentive (RDTI) is the Federal Government’s flagship program to support and encourage innovation, research and development activities undertaken in Australia. This program is available to companies across a broad range of industries and business activities. Find out more information on the RDTI here.

Three key considerations before lodging your 2023 R&D claim:

Eligible R&D activities

Examples of activities worth considering under the RDTI eligibility criteria may include:  

  • Development of new or improved materials, products, devices, processes, or services.
  • Activities to resolve or rectify recurring quality issues or failures.
  • Activities to improve sustainability and emissions.
  • Activities to increase production efficiency and throughput.
  • New technology or equipment implemented or commissioned.
  • Activities to automate existing manual processes and systems.         

While the RDTI is a self-assessment based program, it is critical that you have documentation to substantiate the eligibility of any R&D activities in line with the legislative criteria in the event of a review, audit by AusIndustry or the ATO. 

Types of costs eligible under the R&D Tax Incentive

Expenditure with a nexus to the R&D activities registered as part of your R&D Application may be claimed under the RDTI.  Examples of eligible costs include:

  • Salary and wages
  • Overheads (e.g., rent, electricity)
  • Contractor payments
  • Direct costs
  • Depreciation
  • CRC contributions 

The R&D Application must clearly articulate the eligible R&D activities that you are seeking to claim associated costs for. The expenses which you can claim as R&D expenditure, are also limited to the extent they are incurred on R&D activities and apportionment may be necessary.

Generally, eligible costs under the RDTI must be incurred in Australia by the R&D entity. If you are looking to register activities undertaken overseas and the subsequent costs, you are required to have applied for and received a successful Overseas Finding Certificate from AusIndustry in advance. Additional eligibility criteria must be met along with a separate application process for an Overseas Finding.

Application of the ATO’s recent Taxpayer Alerts (TPAs)

The ATO has recently released two TPAs relating to activities delivered by associated entities and activities conducted overseas for foreign related entities. These TPAs focus on arrangements used to claim a R&D tax offset when it would not otherwise be available or used to artificially increase the R&D tax offset amount.

It is critical that companies consider the application of all legislative requirements, guidance and alerts to ensure they are the proper claimant of the RDTI. 

 

We’re here to help

Please reach out to Grant Thornton’s Innovation Incentives team to discuss a potential 2023 R&D Application before 30 April 2024.

Learn more about how our Research and Development (R&D) Tax Incentive services can help you
Visit our Research and Development (R&D) Tax Incentive page
Learn more about how our Research and Development (R&D) Tax Incentive services can help you