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R&D Taxation Services Matt Cliff 20 October 2015
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Bentleys R & D Taxation Services 2015

Apr 14, 2017

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Page 1: Bentleys R & D Taxation Services 2015

R&D Taxation ServicesMatt Cliff

20 October 2015

Page 2: Bentleys R & D Taxation Services 2015

Presentation OverviewR&D Tax Incentive R&D Tax EnvironmentCurrent Compliance FocusesBentleys R&DRDM LiveBest Practice R&D

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The R&D Tax Incentive

It is a rules based, self assessment program providing accelerated tax deductions and tax refunds for companies that conduct R&D.It is a reward for knowledge management … not ‘all about Tax!’

Administered jointly by AusIndustry & the ATOAustralia’s premier business incentive mechanism - $2.97 billionClaimed by 13,600 companies per annum - $18.5 billion – under subscribed– growing at 15% per annum45% Refundable & 40% Non Refundable componentsAdvisory dominated by Big 4, but seeing a move to smaller providers

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R&D Tax Environment

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The R&D Tax Incentive Review of the R&D Tax Incentive

The Australian Government announced its intention to examine support for research and development (R&D), including the R&D Tax Incentive programme, in the context of the Tax White Paper. The Review will evaluate the programme’s effectiveness and efficiency, as well as assessing the extent to which it is meeting its intended policy objectives.

Proposed Change in Rates

In the 2015-16 Budget released on 12 May 2015, the Australian Government reiterated its intention to change the rates of assistance under the R&D Tax Incentive to 43.5 per cent for eligible entities with a turnover under $20 million per annum and 38.5 per cent for all other eligible entities, to apply from 1 July 2014. The Government indicated in March 2015 that it remains committed to re-introducing legislation to change the rates of assistance. The rates of assistance currently legislated are 45 and 40 per cent respectively.

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Current areas of focus Software Development

Software Development vs Software R&D Mining and Exploration

History of whole of mine Flow Sheet models/Existing Processes

Construction Complex engineering but no experimentComplying with Regulation

Broad-acre FarmingPurpose and Scale of Activities Inflated Claims

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Current areas of focus Tax Payer Alert TA 2015/3 released on 15 October 2015, advises the ATO and

AusIndustry are reviewing arrangements where primary producers involved in broad acre farming are claiming the R&D Tax Incentive for the cost of fertilisers and other treatments (soil improvers) where a significant part (or all) of the expenditure that is incurred relates to 'business as usual' farming activities and not to R&D activities.

The activities lacked the "systematic progression of work" (which requires a hypothesis, experiment, observation and evaluation leading to logical conclusions)The activities involved the use of established products and existing organic treatment methodologies. A competent professional could have known or worked out the outcome of using the soil improvers without conducting an experiment. The activities claimed did not have a significant purpose of generating new knowledge. The size of the farming area to which the soil improvers were applied was excessive relative to the number of samples taken. The scale of the activities was more consistent with commercial production than the generation of new knowledge. Entities may have relied on R&D undertaken by or for another party, rather than carrying on their own R&D activity. The onus is on taxpayers to show that they are carrying on their own R&D activity.

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Bentleys R&D Tax Services

We provide a service that is designed to enable you to better manage R&D leading to improved commercialisation prospects while at the same time improving R&D Tax compliance with reduced compliance costs.A collaborative approach that provides expertise through the whole R&D cycle.Contemporaneous advising to support contemporaneous record keeping and knowledge managementValue for Money

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SaaS, Precision ToolsAugment rather than ReplaceBest PracticeEducativeModularReduce compliance risksReduce compliance costsGuidedCollaborative Contemporaneous advising

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Projects and Activities

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Core Activity

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Costs

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Work Logs

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Best Practice R&DPlan projects, establish technical goals and identify knowledge gapsIdentify activities and classify as core or supporting.Record and communicate knowledge transactions and events contemporaneously.Record time and costs at an activity level identifying the nexus with the activity.Maintain substantiation materials.

MUST HAVE CONTEMPORANEOUS EVIDENCE OF EACH

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Thank you