07 Feb, 2024 | Accounting News

Updated guidance on R&D claims

New taxpayer alerts on incorrect R&D claims that are attracting our attention.

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We've released 2 new taxpayer alerts to warn entities and their advisers about our concerns regarding incorrect Research and Development (R&D) tax incentive arrangements we’re reviewing. These alerts are about expenditure incurred to associated entities and activities conducted overseas for foreign related entities.

We’re concerned these arrangements are being used to:

  • claim the R&D tax offset in situations where it would not otherwise be available, either at all or in the income year claimed by the R&D entity
  • artificially increase the amount of the R&D tax offset claimed.

We encourage you to read these alerts and consider if your clients need to contact us or make a voluntary disclosure by amending their R&D tax incentive claim.

Penalties may apply to participants of these types of arrangements. These penalties can be significantly reduced if the amendment request is treated as a voluntary disclosure. Generally, the reduction is greater if the disclosure is made before being notified of an examination of your client's tax affairs.

About the alerts

Taxpayer Alert TA 2023/4 Research and development activities delivered by associated entities. We’ve identified arrangements where an entity incorrectly claims the R&D tax offset for expenditure incurred under an agreement with an associated entity who conducts those activities.

Taxpayer Alert TA 2023/5 Research and development activities conducted overseas for foreign related entities outlines our concerns about arrangements where Australian entities claim the R&D tax offset for expenditure incurred on R&D activities conducted overseas. Arrangements of concern include where an R&D entity has purported that R&D activities were conducted for its own benefit, but those activities were instead conducted for a foreign entity that is ‘connected with’, or is an ‘affiliate’, of the R&D entity.

To provide information about this or another type of arrangement, or about a promoter of this or another arrangement, you can:

 

 

ATO
14 December 2023
ato.gov.au