Documentation is Paramount

Documentation is Paramount for R&D Tax Incentive Claims

One of the most overlooked elements of companies seeking to apply for an R&D Tax Incentive, is appropriate technical and financial documentation.

When working with our clients, one of our priorities is always ensuring that measures are in place to ensure that sufficient documentation prior, during and after R&D activities have been undertaken. This discipline is important not only to comply with reporting requirements under the R&D Tax Incentive, but also improves the impact and effectiveness of R&D investments by providing data that facilitiates the analysis of R&D outcomes, and can highlights potential areas for future development.

Recent AAT decisions on R&D tax stress the importance of maintaining records to substantiate R&D activity. While these cases were related to claims made under the R&D Tax Concession, they do suggest that the government will adopt a more rigorous approach with regard to R&D record keeping.

This stance is reinforced by guidance material (including case studies) on the R&D Tax Incentive, stressing the importance of project governance and records that evidence experimental activity and the application of the scientific method. See cases HZXD v Innovation Australia [2010] AATA 879 and NaughtsnCrosses v Innovation Australia [2012] AATA 743

For further information or guidance on how to implement appropriate record keeping procedures for your company, please contact NOAH on (02) 9929 0100, or via our contact form.