The Australian Taxation Office (ATO) is now required by law to publish certain information about claimants of the R&D Tax Incentive. The intention is to introduce a new level of transparency to the program to encourage voluntary compliance and foster greater public understanding of how this valuable incentive is being utilised.
The transparency reports will be published two years after the end of the financial year. The first report applies to companies that lodged a 2022 company tax return with an R&DTI offset claim and is expected to be published in September 2024. The report will reveal key details such as the names of companies, the total amount of the claim (without a detailed breakdown), and the industry sector they operate in. While this information will be publicly available and it’s acknowledged that this increased transparency may also pose challenges for R&D claimants, it’s important to note that sensitive commercial data will be protected.
When first legislated, the transparency measures were controversial and met with a mix of support and criticism. Some argued that increased transparency is essential for ensuring accountability and preventing misuse of taxpayer funds and they believe that publishing this data will deter companies from making fraudulent claims and encourage responsible use of the incentive.
This increased transparency is expected to have several benefits. It will enhance public accountability for R&D claimants, encouraging responsible use of the incentive. Additionally, the data released could provide valuable insights for researchers, policymakers, and industry stakeholders. By understanding the distribution of R&D investment across different sectors, it will be possible to identify trends and areas where further support may be needed to drive innovation in Australia.
While the ATO has committed to protecting commercially sensitive information, it will be crucial for the ATO to provide clear guidance and support to companies during this transition to ensure a smooth and fair implementation of the new transparency measures.
When announcing the transparency report, the ATO also took the opportunity to flag some of the common errors made by companies during the R&D registration process, including basic information such as income year, correct entity and contact details. Other common mistakes include incorrect calculations of expenditure, failing to adequately document R&D activities, and misinterpreting the rules around collaboration with external parties. Any error can result in a delay in processing, additional scrutiny from the ATO, and potential penalties. To mitigate these risks, businesses are encouraged to seek expert advice, from organisations such as NOAH Connect, when preparing their R&DTI claims.
