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Monadelphous discloses it will submit no R&D claim for current period

As has been reported in the media previously, MONADELPHOUS GROUP LIMITED has recognised a 6.3M provision in its FY19 results with respect to a potential repayment of base tax liability for disputed R&D Claims in the FY15 and FY16 periods.

Monadelphous announced to the ASX in May 2019 that the company had received notices of amended assessments from the ATO relating to findings by Innovation Australia that R&D Activities registered in the FY15 and FY16 periods were not eligible, and the provision would indicate that the underlying disputed R&D Activities may have R&D Expenditure of around $70 to $80 Million.

Reports of this provision follow other media reports and ASX disclosures of R&D Tax disputes relating to both private and public companies.

Interestingly, on page 69 of the Monadelphous’ 2019 annual report to shareholders released on 14 October 2019, the company has disclosed that “The group has not claimed or recognised the R&D Tax Offset for the current year”.

 The decision of Monadelphous to go from lodging substantial R&D Claims recent years, to not registering any R&D activity in the current year may be a trend that is adopted by other companies, and may foreshadow a reduction in registered R&D Expenditure and the corresponding cost of the R&D Tax Incentive programme.

Whilst we have no knowledge around the specific of Monadelphous’ disputed activities, or any opinion on their eligibility, we do encourage programme regulators to pay close attention to the level of reported R&D Activity in the coming months, noting that recent studies have indicated Australia’s relative business investment in R&D is declining against OECD peers.

 The above also serves as a reminder that R&D Claims must be compiled and assessed with care, and that claimants should consider guidance material published by AusIndustry and the ATO on R&D Tax Compliance.

To see how we can assist you with your R&D claim contact us here.