October 18th, 2023
The AFR has reported in late September 2023, that officials from the Australian Taxation Office visited a high profile ASX listed software development company last month as part of inquiries about whether the group inappropriately claimed R&D Tax Offsets.
The article seems to suggest that the issue may relate to overclaiming of expenditure on R&D Activities conducted overseas (as opposed to whether the expenditure or activity meet the general R&D Tax Incentive criteria).
Under the R&D Tax Incentive, companies may apply to claim the cost of overseas activities where they meet a strict criteria, one of the requirements being that expenditure in Australia must exceed expenditure overseas. The AFR article reports that in this case:
- The company had claimed more than $70 million in R&D projects in early 2020.
- The company had claimed 55 per cent of that expenditure was in Australia, but it was closer to 9 per cent.
Companies claiming the R&D Tax Incentive should keep abreast of their requirements and the regulator guidance.