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

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 highlight 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.

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