‘Research and Development’ (R&D) tax concessions involve a two step process – first to get the project registered with the Industry Innovation and Science Australia (IISA) as R&D and then to claim the concessions with the ATO, both of which involve separate appeals. The Board of Taxation is investigating the wisdom of this ‘dual-agency’ approach.
See below for an extract from the agenda of the Law Council of Australia tax committee, regarding this issue.
Board of Taxation – Review of ‘dual agencey’ R&D Tax Incentive – both Innovation & Science and also ATO
The R&D Tax Incentive (R&DTI) program is a self-assessment program that provides tax offsets for eligible company R&D expenditure. The stated objective of the program is to encourage industry to conduct R&D activities that may otherwise not be conducted, particularly where the new knowledge gained is likely to benefit the wider Australian economy.
The R&DTI is jointly administered by the Australian Taxation Office (ATO) and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER), with the ATO being responsible for the administration and processing of R&D tax offset claims, and IISA responsible for registering companies’ R&D activities.
The Board of Taxation (Board) is requested to evaluate the R&DTI dual agency administration model, with a view to:
- identifying opportunities to reduce duplication between the two administrators,
- simplify administrative processes, or
- otherwise reduce the compliance costs for applicants.
The Board may make recommendations to modify the R&DTI’s administrative model or to streamline existing administrative functions or processes. If the Board finds that taxpayers experience difficulty in understanding the different roles and responsibilities of the two administrators, the Board should consider whether education programs or communications would assist.
See the Board’s website, for further detail about this review.
[Law Council Tax Committee Meeting – June 2021 Agenda]