‘IDEA’ recordkeeping is important

Companies do not have to apply in advance to a government agency to gain approval to undertake R&D activities which can ultimately lead to claiming the R&D Tax Offset.

However, if the Company Directors want to obtain certainty that the R&D activities will be accepted by the Australian Taxation Office, the company can submit an ‘Advance Finding Application’.

If the company wants to undertake some of the R&D overseas, it is necessary to lodge an ‘Overseas Findings Application’ with the ATO before the end of the financial year in which the overseas activities were conducted. Gaining this approval can be difficult.

Other than these two items, the first time a government agency knows that a company has undertaken R&D is when the R&D Activities Report is lodged with AusIndustry.

To be able to claim the expenditure from the ‘idea’ onwards, the company is required to maintain appropriate documentation relating to:

Details of the work undertaken relative to planning the R&D activities and conduct of the experiments and other R&D activities supported by team member timesheets and contractor’s invoices.

Preparation of costs summaries for every aspect of the work relating to R&D.

Details of the systematic progression of work:

• experiments conducted
• observations/evaluation/conclusions
• prove or disprove the hypothesis or hypotheses
• what are the logical conclusions?
• review of the results

Some SME companies successfully conduct significant R&D projects over a number of years, with many of them relying on advice from external consultants.

Towers Business Development can assist companies to maintain the required records and the preparation of the return to be lodged with AusIndustry. To find out more, contact us on 1800 232 088 or email .