Online diagnostic tool to help businesses claim R&D tax incentives

BDO has advised businesses considering making a claim under the research and development (R&D) Tax Incentive to be aware of the various impending lodgement deadlines imposed by the Australian Government.

BDO R&D partner Nicola Purser has said many companies never start the process of applying for R&D tax incentives as they believe it is too costly and daunting.

“Many companies, particularly SMEs, are depriving themselves of potentially hundreds of thousands of dollars in R&D tax incentives due to ongoing confusion around eligibility criteria,” Purser said.

“The new R&D tax incentive provides a 45% refundable offset to companies with a group annual turnover of less than $20 million.

“Yet a lot of smaller companies are simply too afraid to start the process of determining their R&D tax incentive eligibility as they believe it will cost too much money and will be too much effort.

“The process is potentially of great value to a business, but for best results we strongly recommend companies start now rather than leave it until the last minute.”

To help companies determine their eligibility for the R&D tax incentives, BDO has launched its R&D Tax Incentive Eligibility Tool - a free online diagnostic tool which guides users through a series of questions to provide an indication as to whether a business has a basis for preparing a claim. Purser explains that the tool “will give businesses an indication of their potential R&D tax incentives and outline the key first steps they should take in the process”.

Purser said the Australian Government’s new R&D Tax Incentive program has given businesses greater financial assistance and certainty.

“While the processing of claiming for R&D tax incentives still requires an investment of time from companies, it can return significant net financial benefit of up to 15 cents for every dollar spent on R&D and the potential to cash out tax losses.

“The new system also provides much greater certainty, with successful advance findings now binding on the Australian Tax Office.”

Companies looking for certainty in relation to the eligibility of their 2011/12 R&D activities must lodge an Advanced Finding with AusIndustry by 30 June 2012.

Companies undertaking overseas R&D activities during the 2011/12 financial year also need to lodge an Advanced and Overseas Finding by 30 June 2012 or risk having their overseas activities deemed ineligible.

All other claims under the R&D Tax Incentive must be lodged within 10 months after the end of the income year.

The BDO R&D Tax Incentive Eligibility Tool can be accessed free of charge through the BDO website.