Why use an R&D Tax Incentive consultant?
A competent R&D Tax Incentive consultant will help you prepare and submit your Tax Incentive application to AusIndustry and the associated R&D tax incentive schedule to the Australian Taxation Office. The R&D Tax Incentive consultant should be able to maximise your claim, ensure that your application is compliant, and minimize the time impact on your business.
Why do you need a Tax Incentive consultant?
In principle, you don’t need an R&D Tax Incentive consultant to draft your submission to AusIndustry – you can do it yourself.
AusIndustry does try hard to explain the requirements of the R&D Tax Incentive with good resources available from AusIndustry (see Offset your R&D costs to help innovate and grow your business). However, preparing and submitting an R&D Tax Incentive submission to AusIndustry is complex for claimants new to the R&D Tax Incentive program. Even with the resources available, getting it right certainly isn’t easy.
While newcomers to R&D Tax Incentive can master the skills and knowledge required to draft their own applications, the learning curve is steep, and that time is probably better spent on your core business.
Where do claimants go wrong?
Achieving an effective and compliant application is much harder than it might appear. The R&D Tax Incentive is a self-assessment program, so it can appear that you have successfully secured a refund, only to find out (up to 4 years) later that your application has been rejected or at least questioned when AusIndustry subjects the application to a review.
In the worst-case scenario, AusIndustry may reject your latest R&D Tax Incentive application, and as a result, then go back another 3 years reviewing (and possibly rejecting) those applications as well. Even if you really do have eligible R&D, recovering from that situation is extremely time-consuming and expensive.
Many claimants think that they have done a good job on their self-drafted application but fall into one of several traps – such as focusing completely on how ground-breaking their R&D is rather how it complies with the R&D Tax Incentive requirements.
There is certainly nothing wrong with favourably presenting your R&D – it helps tell a good story. Just keep it short. What AusIndustry really wants to know is what problems you solved, the new knowledge you needed to solve those problems and what experiments you needed to perform to gain that knowledge. In short, AusIndustry is less concerned about what you did than how you did it and why.
See “Are you making mistakes in your Tax Incentive application?” for an explanation of the traps awaiting new claimants.
What an R&D Tax Incentive consultant can do for you
There are several good reasons why you should use a specialist tax incentive consultant for your R&D Tax Incentive submission.
An R&D Tax Incentive consultant will:
- Be a registered tax agent so that they can submit your R&D Tax Incentive application.
- Understand the requirements of the R&D Tax Incentive program in detail.
- Have skill and experience writing effective AusIndustry R&D Tax Incentive applications – how you present your R&D actually matters.
- Ensure that you have provided sufficient technical explanation to allow a compliant and coherent application to be drafted by the consultant.
- Ensure that the scope of the claimed R&D activities covers everything you are entitled to and nothing that you are not.
- Ensure that the technical explanation in the completed R&D Tax Incentive application is understandable to a layperson in AusIndustry and demonstrates compliance with R&D Tax Incentive requirements.
- Confirms that the financial information is correct in the application for the claimed R&D.
- Ensures that the core and supporting R&D activities are handled correctly.
The caveat is that you need a good consultant – a poor consultant can literally do more harm than good. See Why choose a good R&D Tax Incentive consultant if you need convincing about the difference between a good and an ordinary R&D Tax Incentive consultant. Otherwise, just read How to choose the right R&D Tax Incentive consultant to find out how to identify a good consultant.