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Airtasker Provide R&D Tax Update in Half Year Dec 2021 Results: Dispute Resolved

Airtasker has previously been associated with the “compliance crackdown” on R&D Tax Incentive claims, particularly for software, after reports emerged in December 2018 that the company’s prior year claims were being disputed following ATO review.

Airtasker’s dispute came around the time of other reported R&D tax disputes whereby companies such as CBA and Newcrest made disclosure of reduction to previously lodged self assessed R&D claims.

Airtasker has subsequently completed a successful IPO, and an update was announced to the ASX on the R&D tax dispute in an August 2021 announcement which noted:

“The group is currently in dispute with the ATO in relation to its R&D Tax Offset incentive claimed for the years ended 30 June 2015 and 30 June 2016, which total $1,962,000. The balance of government grants provisioned as at 30 June 2021 has reduced compared with 30 June 2020, reflecting R&D Tax Offset incentive claims received by the group during the year ended 30 June 2021 in respect of the years ended 30 June 2017, 30 June 2018, 30 June 2019 and 30 June 2020, which were received by the group as an offset against the existing liability.”

The following update was announced to the ASX on the R&D Tax Dispute In an February 2022 announcement covering half year results, which noted:

“During the half-year ended 31 December 2021, the Group and the Australian Taxation Office (‘ATO’) resolved their dispute regarding to the Group’s research and development activities registered for the years ended 30 June 2015 and 30 June 2016. This settlement reduced the balance of government grants provisioned as payables as at 31 December 2021 compared with 30 June 2021 by $633,000 (inclusive of the general interest charge reduction). The Group is currently undergoing an income tax assessment amendment process with the ATO relating to the income years ended 30 June 2015 and 2016 in order to give effect to the settlement.”

This is a good outcome.

The widely reported crackdown on software development activities under the R&D Tax Incentive did indeed occur during the period of approximately February 2017 to late 2019. We have however noted that in recent times, compliance processes for R&D claims have become reasonable. We note that:

• AusIndustry (who jointly administer the programme and make findings on eligibility) announced in November 2019 that they were overhauling their compliance frameworks to enhance the programme for participants;
• A number of companies whose claims were previously ruled as ineligible (including ASX listed Software company Xped, Monadelphous and several ASX resource companies) have been successful in challenging and reversing adverse eligibility assessments;
• Additional guidance has been published by the regulators, and there have been few reports of disputed claims lately.

The past 5 years has been a tumultuous period in the history of Australian R&D tax incentives, where the programme was subject to a number of actual and proposed changes to legislation and eligibility interpretations. Hopefully, the programme is heading in a positive direction and a period of stability will prevail… Whether this remains will be up to companies, advisors and regulators acting in good faith, and assessing claims in accordance with the letter and spirit of the law.

Please get in touch with us if you require assistance with the documentation and assessment of your R&D Activities.