Posted By: R&D SmartTax

R&D Eligibility Wizard

R&D Eligibility Wizard

The great thing about R&D eligibility is that if you are eligible, you are guaranteed to get the R&D tax benefits. It’s law. A cheque from the ATO for tens or even hundreds of thousands of dollars could be coming your way, just for ticking all the right boxes at tax time.

But the government has not exactly made finding out eligibility the easiest task.  For the R&D Tax Offset and R&D Tax Concession Programs, eligibility rules are written into two main pieces of legislation, the Income Tax Assessment Act (1936) and the Industry Research and Development Act (1986).  The ITAA 1936 legislation alone stretches from Section 73B to Section 73Z over 112 pages. On top of this there are Tax Rulings, Guidelines, Fact Sheets, Interpretive Decisions and Case Law to all aid in the interpretation of the rules.

It is no wonder that to date the only way companies have been able to wade through this has been with the aid of R&D tax specialist consultants. And the consultants know they have a captive market. Fee schemes range from 10% to 30% of benefit amounts or hourly rate billing at up to $1000/hr.  But it not just the fees, by letting the consultants do all the work, companies often find they have absolutely no idea about what is claimed and how. And the claim preparation period can stretch for months and months taking up valuable staff time to run back and forth providing information for the consultants. Some companies may be justified in thinking that the benefit may not be worth the effort and cost.

But fortunately there is now a viable alternative for companies to find out eligibility without the use of consultants. It is through a new online software tool called the R&D Eligibility Wizard. Designed to be easily accessed at any time by small businesses who can least afford consultant fees or lost business time, it contains all the essential eligibility criteria for companies to quickly know their eligibility before they claim.

The R&D Eligibility Wizard covers both company and project eligibility, plus has a handy benefit calculator section to help companies work out what their R&D Tax Cheque is likely to be. Eligibility issues companies need to consider include:

  • which company is the correct claimant where there are multiple parties involved such as clients and suppliers
  • what types of software are eligible
  • how new the technology being developed needs to be, and
  • what types of records need to be kept to substantiate eligibility

But the R&D Eligibility Wizard does more than just tell you which projects you can claim at tax time, it actually educates you about the R&D tax programs so that they become part of your decision making in your business when deciding on strategic directions to take. For example, would your decision to undertake a new project or not change if you knew for sure that the government would pay up to 37.5% back at tax time?  And although you may not be incorporated yet, if you knew that these programs and all grants are only given to incorporated companies as opposed to sole traders, trusts or partnerships, then you may decide to talk to your accountant about changing your business structure so you can get these benefits.  And you may also negotiate a supplier contract differently to ensure you can claim the R&D tax benefits.

If your company does undertake work to create new or improved products, devices, services, materials or processes, then there is a good chance it could be eligible for R&D tax benefits.  The R&D Tax Offset program is extremely lucrative for small businesses that rely upon the extra cashflow every year.

We hope that all small businesses and their accountants find the R&D Eligibility Wizard tool of great value, and look forward to seeing your smart ideas benefit Australia too.

About R&DSmartTax

R&D SmartTax tools were born out of a desire to help the many smart small Australian companies access the R&D Tax Break benefits without the need for hours spent reading tax literature or expensive consultant fees. The R&D Eligibility Wizard is designed to be low cost, easy to use and available for all Australian industries.


Easy to use

A. Blauensteiner
Australian Institute of Commercialisation

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