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Application of R&D Tax Incentives to Software debated during Senate Select Committee of Financial Technology

March 2nd, 2020

Fintech Australia has used a speech at the the Senate Select Committee of Financial Technology and Regulatory Technology to call for better clarity that software activities be included within the scope of eligibility for R&D Tax Incentives.

The Article reports a senior figure from ISA responding to the question “Would Atlassian be considered eligible for R&D tax incentives?” with a reply of “No, because it’s software”.

We note however that this comment may be incorrect or out of context since:

• It has widely been reported in the media that Atlassian’s nil corporate tax payments are due to the company registering significant expenditure on activities under the R&D Tax Incentive;
• Whilst software activities have certainly been scrutinised in recent years, AusIndustry officials will uniformly consider that software activities can be eligible for the R&D Tax Incentives where the criteria is met. AusIndustry have also published many guidance documents detailing the requirements for software R&D activities, including the latest in February 2019 titled “Software activities and the R&D Tax Incentive” and earlier, “Getting software development R&D Tax Incentive claims right”.

We appreciate the advocacy of Fintech Australia calling for greater clarity of software development R&D Activities under the R&D Tax Incentives.

We also acknowledge AusIndustry’s efforts in improving compliance processes in recent months, noting:

• AusIndustry has released a new integrity framework;
• AusIndustry successfully allowed the appeal of a listed company’s software claim in December 2019, setting aside a previous finding in July that Xped Ltd’s R&D Activities were considered by AusIndustry to not be eligible.