ATO Warning on R&D Tax Incentive

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06 / Aug / 2014


If your business is claiming the R&D Tax Incentive then you need to keep good records of your R&D expenditure.
The ATO is flagging a recent court decision in which Tier Toys Limited failed to prove that their claimed expenditure was “directly in respect of” eligible R&D activities because relevant records were missing.
Make sure that your records:
* Are detailed enough to distinguish between charges associated with eligible and ineligible R&D activities;
* Verify the nature, amount and relationship of the expenditure incurred on R&D activities; and
* Show how you apportioned expenditure between your eligible core and supporting R&D activities as opposed to your other non-R&D activities.
And don’t forget that you must keep your records for a minimum of five years!
If you are unsure about the methods you are using to differentiate expenditure on eligible and non-eligible R&D activities please give us a call.  We are here to help!