The federal government provides taxation incentives for eligible research and development (R&D) activities undertaken by businesses, however the process of attaining these incentives can be difficult and complex. We demonstrate an alternative approach to working through the R&D eligibility and claims process that gives you the confidence in this space.

1. R&D Taxation
Services
Matt Cliff
20 October 2015

2. Presentation Overview
R&D Tax Incentive
R&D Tax Environment
Current Compliance Focuses
Bentleys R&D
RDM Live
Best Practice R&D

3. The R&D Tax Incentive
It is a rules based, self assessment program providing accelerated tax
deductions and tax refunds for companies that conduct R&D.
It is a reward for knowledge management … not ‘all about Tax!’
Administered jointly by AusIndustry & the ATO
Australia’s premier business incentive mechanism - $2.97 billion
Claimed by 13,600 companies per annum - $18.5 billion – under
subscribed– growing at 15% per annum
45% Refundable & 40% Non Refundable components
Advisory dominated by Big 4, but seeing a move to smaller providers

4. R&D Tax Environment

7. The R&D Tax Incentive
Review of the R&D Tax Incentive
The Australian Government announced its intention to examine support for research
and development (R&D), including the R&D Tax Incentive programme, in the context
of the Tax White Paper. The Review will evaluate the programme’s effectiveness and
efficiency, as well as assessing the extent to which it is meeting its intended policy
objectives.
Proposed Change in Rates
In the 2015-16 Budget released on 12 May 2015, the Australian Government
reiterated its intention to change the rates of assistance under the R&D Tax Incentive
to 43.5 per cent for eligible entities with a turnover under $20 million per annum
and 38.5 per cent for all other eligible entities, to apply from 1 July 2014. The
Government indicated in March 2015 that it remains committed to re-introducing
legislation to change the rates of assistance. The rates of assistance currently
legislated are 45 and 40 per cent respectively.

8. Current areas of focus
Software Development
Software Development vs Software R&D
Mining and Exploration
History of whole of mine
Flow Sheet models/Existing Processes
Construction
Complex engineering but no experiment
Complying with Regulation
Broad-acre Farming
Purpose and Scale of Activities
Inflated Claims

9. Current areas of focus
Tax Payer Alert TA 2015/3 released on 15 October 2015, advises the ATO and AusIndustry
are reviewing arrangements where primary producers involved in broad acre farming are
claiming the R&D Tax Incentive for the cost of fertilisers and other treatments (soil
improvers) where a significant part (or all) of the expenditure that is incurred relates to
'business as usual' farming activities and not to R&D activities.
The activities lacked the "systematic progression of work" (which requires a hypothesis,
experiment, observation and evaluation leading to logical conclusions)
The activities involved the use of established products and existing organic treatment
methodologies.
A competent professional could have known or worked out the outcome of using the
soil improvers without conducting an experiment.
The activities claimed did not have a significant purpose of generating new knowledge.
The size of the farming area to which the soil improvers were applied was excessive
relative to the number of samples taken. The scale of the activities was more consistent
with commercial production than the generation of new knowledge.
Entities may have relied on R&D undertaken by or for another party, rather than
carrying on their own R&D activity. The onus is on taxpayers to show that they are
carrying on their own R&D activity.

10. Bentleys R&D Tax
Services
We provide a service that is designed to enable you to better manage
R&D leading to improved commercialisation prospects while at the same
time improving R&D Tax compliance with reduced compliance costs.
A collaborative approach that provides expertise through the whole R&D
cycle.
Contemporaneous advising to support contemporaneous record keeping
and knowledge management
Value for Money

11. SaaS, Precision Tools
Augment rather than Replace
Best Practice
Educative
Modular
Reduce compliance risks
Reduce compliance costs
Guided
Collaborative Contemporaneous advising

12. Projects and Activities

13. Core Activity

14. Costs

15. Work Logs

16. Best Practice R&D
Plan projects, establish technical goals and identify knowledge gaps
Identify activities and classify as core or supporting.
Record and communicate knowledge transactions and events
contemporaneously.
Record time and costs at an activity level identifying the nexus with the
activity.
Maintain substantiation materials.
MUST HAVE CONTEMPORANEOUS EVIDENCE OF EACH

17. Thank you