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Top Tax Tips – 15 February

ATO spotlight on R&D claims: Let us help you determine whether you are eligible

Under the R&D incentive, a company that conducts innovative activities (and spends at least $20,000 on R&D activities) may qualify for an incentive on eligible R&D activities (i.e. for 2016, companies with a turnover of less than $20 million will qualify for a 45% cash rebate on eligible R&D expenditure while companies with a turnover of $20 million or more will qualify for a 40% non-refundable offset on eligible R&D expenditure).

Broadly, eligible R&D activities can be either core R&D activities (e.g. systematic experimental activities conducted for the purpose of generating new knowledge) or supporting R&D activities (e.g. activities that relate to the core R&D activities).

The ATO recently warned that some companies attempt to claim the R&D incentive on ordinary business activity expenditure (e.g. ordinary production costs of products sold to the market in the ordinary course of business) even though such expenditure clearly does not relate to core or supporting R&D activities.

Because the ATO will be focusing on R&D claims, please contact us if you have any concerns about your R&D claims.

We can assess the eligibility of your company’s business and projects to the R&D concessions (e.g. determine whether activities are core or supporting R&D activities) and register the R&D activities with AusIndustry by 30 April 2017 (for companies with income years ending 30 June 2016) so that when the company lodges its company tax return and R&D schedule (and quoting the registration number), the correct tax offset/refund may be claimed from the ATO.

When is the best time to make a voluntary repayment of your tax debt?

Although the voluntary repayment bonus (i.e. broadly a 5% bonus on voluntary HELP repayments) no longer applies from 1 January 2017, taxpayers with outstanding tax debts may still consider making such repayments to ensure the balance is paid off earlier (and thereby avoiding further interest charges and potential penalties on any outstanding tax debt).

Please come and talk to us so that we can assist you with making such a payment on time (usually the best time would be before you lodge your tax return).

How can Nexia Edwards Marshall help you?

For any questions or to discuss any of the above in relation to your personal situation, please contact Grantley Stevens or your Nexia Edwards Marshall Advisor.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Advisor.

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