How do I prepare my Research and Development Tax Incentive claim?

July 6, 2023 How do I prepare my Research and Development Tax Incentive claim?

Preparing for your R&D tax incentive claim

So you have learned about the Research and Development Tax Incentive (R&DTI) and you think you may have a shot at it – what next? What do you need to do to prepare? What can you do to improve your chances of accessing these tax credits? Follow these steps and you’ll be on a great path for your R&DTI claim.

Access your eligibility

The first step – you must be eligible. If you need assistance on determining your eligibility you can refer to our blog on R&DTI eligibility.

Conduct your Research and Development activities

Once you have confirmed your eligibility, proceed with conducting your research and development activities ensuring that you are conducting experiments and focusing on furthering knowledge. Make sure that you are self-assessing eligibility requirements throughout your activities.

Keep records that support your claim

It is crucial to maintain thorough and accurate records that support your claim for the Research and Development Tax Incentive. These records should demonstrate the nature of your Research and Development activities and all of the associated costs. Keeping accurate records is one key area where many Research and Development claims fail or are unable to substantiate the expenditures for research and development.

Register your activities with AusIndustry

Once you have conducted your experiments and finished all your Research and Development activities, it is time to register your activities. Head to the AusIndustry website where you can access the registration forms and fill them out. Applications for registration must be submitted annually within 10 months after the end of the income year. Ensure that you register all activities or else this could prevent your company from being able to register these activities in following years.

Claim the Research and Development Tax Incentive as a credit in your tax return

You can now claim the Research and Development tax incentive when filing your annual income tax return, which will be reviewed by the Australian Taxation Office (ATO). To claim, you must enter your registration number (received from registering your activities with AusIndustry) and put it into the Research and Development schedule of your company’s annual tax return.

The best way to support your Research and Development Claim is to get professional advice early on.

And remember…

It is important to note that you cannot register your activities before your activities are completed.

The R&DTI can be a boost for businesses undertaking Research and Development. Unfortunately we see many businesses miss out on claiming the R&DTI because they have either not conducted eligible Research and Development or their expenditure can’t be used for their claim.

If you would like to ensure that your activities are eligible, understanding the rules and some careful planning are important first steps.

We would be delighted to have an initial conversation with you before you commence your Research and Development Activities. And we love helping business owners prepare and submit their R&DTI claims correctly. Contact us to get started.

For more information, read our blog on the Research and Development Tax Incentive or check out the resources from the Australian Government.