How to Minimise AusIndustry Compliance Assessment RISK

The best way to get a good result from AusIndustry scrutiny is to avoid it, by doing a good job of planning, managing, documenting and claiming your R&D.

This makes it easy for the AusIndustry assessors to see and understand your eligible R&D activities.

Understand the eligibility requirements – it's hard to explain how your activities meet the requirements if you don’t understand the requirements. It’s self assessment, so you need to know how the rules work to self-assess. If Ausindustry talks to you and you don’t know the rules, they can be concerned you may not have self assessed eligibility correctly.

Focus on the R&D activities, not the whole commercial project that you’re doing R&D as part of. You need to know the difference between your eligible R&D activities, and your other project activities that are not eligible.

Have your documentation and other evidence together to show what you’ve done and how it meets the R&D requirements. Planning first makes it easy. Understanding what you need to show also makes it easier for you to create or keep the right records. Claiming R&D tax is making a tax claim – like any tax claim, there must be records to support the claim. AusIndustry (or the ATO) knows it’s a risky claim when they ask to see records that substantiate the claim, and the company’s response is ‘What records are you talking about?’

Companies need to be flexible in how they approach an Ausindustry review. More often than not, Ausindustry is looking at your claim because it looks like you’ve got it wrong. The key to satisfying Ausindustry is evidence – so if they’re not satisfied, try to find out why they’re not happy with what evidence you’ve proffered, and think about what you can do to fill the gaps.

Although they may not be the experts, many AusIndustry assessors are highly technically qualified, and have R&D experience. However, some are not, and even the skilled ones are likely to be out of touch with current industry or science state of the art. You need to explain factors like why what you were or are trying to develop is new knowledge to the world, and can’t be determined simply by applying existing knowledge.

If you’re seeking an overseas finding, you’ll need to have genuinely established that your proposed overseas R&D activities cannot be done in Australia. You'll need evidence that you’ve done your homework on that, for example by advertising for staff with the right skills, or getting advice from recruiters about skills availability, or contacting research facilities. Cost can be a factor, but its limited – evidence that Australian skills market rates are higher than you’d like to pay is not enough, it would need to be for example that the only available person is demanding double the current market rate, or that a competitor’s research facility is quoting an astronomical rate for lab time. Timing is also relevant – most commercial R&D is time sensitive – you need to get it done to stay in front of the competition, and to earn a return on the R&D investment. So 12 months, 6 months, or even 3 months might be too long to practicably wait for people or facilities. Being able to evidence what enquiries you’ve made, what responses you’ve got, and what it means for your R&D is critical.

If you are concerned about the increased level of scrutiny being applied by the Department of Industry and the ATO in the last few of years, and the risks of ‘getting it wrong’, R&D Certainty can help you to ‘get it right’.

We can help you by removing the mystery surrounding eligibility and ensure that you have an R&D Plan that will help you and your team undertake R&D activities that can be claimed under the program. We will also help you and your team to configure the plan to bring more of your activities under the R&D Tax Incentive.

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