SR S

WANSON REED

R&D Technical Workshop Series

The New R&D tax credit: Like the curates egg - Good in Parts.

Part 1: How to get 37.5% of your R&D costs back?

R&D Technical Workshop Series

How much do we get?

Companies may claim:  125% uplift on eligible R&D expenditure until 30 June 2011; and  175% incremental premium uplift (if eligible) until 30 June 2011.
Example 1: Deductions/ R&D Spend Assessable Income No Claim 125% Tax Concession $100 $200 $100 $200 $125 $75 $22.5 $22.5 7.5% 125% Tax Offset $100 $0 $125 $0 $0 ($37.5) 37.5%
R&D Technical Workshop Series

Deductions Claimed/Forfeited $0 Taxable Income Gross Tax (30%) Net Tax Payable/(Receivable) Benefit yield of R&D Spend $100 $30 -

What is a core R&D activity?

Are you developing new knowledge? OR Are you developing new knowledge by developing new or improved: - Materials? (e.g. improved cooking mixes, concrete formulas, alloy compositions) - Products? (e.g. concrete product with enhanced setting properties) - Processes? (e.g. improved ethanol production or improved wine fermentation) - Devices? (e.g. efficient ethanol production facility) - Services? (e.g. new SMS portal service)

Are you conducting the activity in a Systematic, Investigative and Experimental manner?

Does your activity have an appreciable amount of novelty? OR Does the activity involve High Levels of Technical Risk?
R&D Technical Workshop Series

How do we define the project?

Step 1: Identify if/where core R&D activities are in the project

Step 2: Determine scope of necessary supporting activities

Those activities directly related to the core R&D
Those activities without which the core R&D would be materially impaired. (ie. necessary to R&D)

Step 3: For each activity, determine portion/length of time relating to the R&D
o Eg.
Design costs what portion
Trials how long necessary to test

o Information sources to assist scoping Gannt Charts

Cost Breakdown Draw our diagram

R&D Technical Workshop Series

Eligible Expenditure under the R&D Concession

R&D Technical Workshop Series

Eligible Expenditure
Direct R&D Expenditure:

    

labour, salary, wages and on-costs external contractors external contractors trial costs design, construction and testing of prototypes consumables used as part of the R&D activities

R&D Technical Workshop Series

Eligible Expenditure
3. Qualifying Contracted Expenditure:

   

Registered Research Agencies Approved Research Institutes Work must be done on behalf of the company Claimant must effectively own the R&D results

R&D Technical Workshop Series

Compliance Requirements

R&D Technical Workshop Series

Registration Procedures
1. Preparation of R&D Application 2. Lodge Application with AusIndustry  Must lodge within ten months of year end 3. Only once registered are you entitled to 125% tax deduction by including in ITR lodged with ATO.

R&D Technical Workshop Series

Substantiation

Need to keep sufficient records to substantiate:  All elements of R&D definition above, for each R&D Activity  All costs incurred on each project All records need to be kept contemporaneously

R&D Technical Workshop Series

How to Maximise Benefits

1. 2. 3. 4.

Increase the level of understanding of the concession and associated eligibility requirements. Identify projects and eligible expenditure as early as possible. Implement systems to capture and monitor R&D activities and expenditure contemporaneously. Fully document project descriptions and substantiate all expenditure comprising a claim.

R&D Technical Workshop Series

SR S

WANSON REED

R&D Technical Workshop Series

The New R&D tax credit: Like the curates egg - Good in Parts.

Part 1: What is R&D and why claim it?

R&D Technical Workshop Series