What the ATO will ask you for
The ATO will ask you for documentation that shows:
- How the expenditure you have incurred relates to the R&D activities you have registered
- How you have apportioned your expenditure between eligible R&D activities and ineligible activities that you receive the major benefit from the R&D activities when amounts have been paid to associates
- How you have calculated adjustments required as a result of either:
- Receiving a government recoupment (clawback)
- Producing a marketable product (feedstock adjustments).
ATO documentation for R&D Tax Incentive – Record Keeping
The types of records appropriate will vary from case to case. The ATO does provide a list of examples of record types that may be acceptable – see Examples of acceptable records.
Best R&D practice is to establish systems that apportion expenditure between R&D and non-R&D activities in real-time. It may be difficult to achieve this in retrospect, even if you have contemporaneous transaction records.
Details of contractors engaged to perform R&D tasks must be recorded. This includes contractor names, timesheets, and expenses allocated to each R&D activity.
The ATO expects you to support your methodology for apportioning your expenditure between eligible R&D activities and non-eligible activities.
R&D expenses will include staff salaries. You must have a documented methodology for apportioning staff time between claimed R&D activities and other activities. Commonly this is done with timesheets. If you use another method, you will need to document this.
See Research and development tax incentive – In detail for guidance on R&D expenses.