30 June is fast approaching! The end of the financial year is an important time, with small decisions potentially having big ramifications. We list the main areas where you should consider ensuring you’re maximising your R&D Tax Incentive refund.
The R&D Tax Incentive offers a 43.5% (25% tax rate + 18.5%) refundable tax offset on eligible R&D expenditure for eligible R&D entities with an aggregated turnover less than $20 million per year. Given the generous incentives, you wouldn’t want to miss out on refunds that you may be entitled to.
To help you, here is a list of some things to get in order by 30 June to ensure that your R&D Tax Incentive is maximised:
- Pay outstanding R&D amounts owed to associates – associate R&D expenditure can only be claimed as a notional deduction in the year it is paid. Consider loaning the company to pay associate amounts (either for the current year or amounts that have been carried forward from prior years)
- Pay outstanding superannuation liabilities – unpaid superannuation is not deductible either under the regular or R&D provisions
- Prepay expenses where appropriate – prepaid expenditure is able to be claimed under the R&D provisions
- Ensure you meet the $20k threshold – if you haven’t spent more than $20k you can’t claim. The exception to this is where you engage a research service provider (RSP). If you haven’t reached the threshold, it may be worth looking at how this can be met – taking into account other tax implications
- Lodge your Advance / Overseas Finding Application – if you wish to claim expenditure incurred on overseas activities, the Finding Application must be lodged before the end of the financial year in which the activities were conducted
- Keep records / review your documentation – a key aspect of the program is being able to demonstrate that you meet the financial and technical requirements. This is best done by maintaining contemporaneous documentation. If you don’t already have robust documentation procedures in place you should think about ways this can be improved.
Are you properly prepared to face the R&D Tax Incentive head on? Fullstack Advisory can be the difference in identifying any obstacles and devising strategies before 30 June so that you can move onward and upward. Contact us today to ensure you are getting the most out of your claim.
