Ramanie Naidoo and Melissa Nikolic discuss the fast approaching R&D Tax Incentive registration deadline.
The Research and Development (R&D) Tax Incentive registration deadline for those companies with a 30 June 2017 year end is rapidly approaching. The statutory deadline for lodging an application is 10 months after the end of the income year; for the year ended 30 June 2017 that means 30 April 2018.
Historically, many companies have left registering their R&D activities to the last minute (i.e. close to the 10 month statutory deadline). Notwithstanding, it is critical that companies are able to demonstrate contemporaneous record keeping at the time the experiments were undertaken i.e. during the prior financial year. Particularly as this is one of the main areas of focus that the regulators have during reviews or audits.
As such, companies undertaking R&D activities should evaluate whether their activities meet the legislative criteria during the year in which the experiments are undertaken and maintain evidence to support both the details of the R&D activities and the associated expenditure incurred. With rigorous records maintained, the natural consequence may be that companies lodge earlier than required and may be in the position to take up the resulting benefit in their income tax returns; with no need for amendment thereof.
It is also worthwhile noting that the April statutory deadline immediately precedes the Federal Budget on 8 May 2018. Recent comments from the Treasurer suggest that the Budget may include changes to the R&D Tax Incentive program, impacting 15,000 plus companies that access it each year.
Watch this space: KPMG’s Federal Budget Brief will include an analysis of any changes that will impact the R&D Tax Incentive or indeed any changes likely to impact innovative companies, whether claiming the R&D Tax Incentive or not.