Are You Prepared for an AusIndustry Audit?

April 19th, 2013

Receiving an AusIndustry ‘Request for Further Information’ (or RFI) can be a daunting thing. The important thing to remember that all companies at some point in time will be monitored through the AusIndustry Compliance Continuum. The RFI is just one of the way’s for AusIndustry gather information for this purpose, so there is no need to panic.

As the R&D Tax Incentive is a self-assessed claim, AusIndustry issues RFIs to ensure that all companies claiming the incentive remain accountable for their claims. It is an important aspect of the legislation as it requires each company claiming the incentive to really consider whether their activities are in fact experiments, are producing a new or improved product or process, as well as producing new knowledge.

Another important element that AusIndustry are looking for is whether the company claiming the R&D Tax Incentive has contemporaneous records of their activities. A recent decision by the AAT (NaughtsnCrosses Pty Ltd and Innovation Australia) clearly outlined the requirement for companies to have documentation to show:

  1. that the activities being claimed actually occurred; and
  2. that the activities followed the experimental process of hypothesis to experiment, observation and analysis, leading to conclusions.

This requirement can scare some companies into thinking that the only eligible activities are those carried out by people in white lab coats who write scientific papers about their experiments. However the fact is that experiments occur in a wide range of settings and the contemporaneous documentation required could include internal emails, minutes from meetings, design sketches, logbook records, or photos of a prototype.

Nevertheless, it is imperative that your company is prepared for the event of an audit if you are claiming the R&D Tax Incentive. We have devised a simple checklist to help you ensure that your business knows exactly what is required when AusIndustry come knocking…