ACG Meeting November 2007
The following are some brief notes on the November ACG Meeting in Sydney. This is intended to provide you with a snapshot of the key points covered:
1. Registration/ATO schedules.
There has been a steady growth in registrations with about 6,400 registrants in 2005/06. More than 64% of registrants have a turnover of less than $5m. There will be a significant revamp of the ATO schedule for 07/08 to reflect the international premium.
If you need to contact the innovation segment at the ATO to check on the status of an R&D claim (particularly in relation to the processing of offset claims) there is a dedicated email address.
2. International Premium.
This was discussed in very broad terms and didn't really cover any of the specifics. The ATO have indicated some literature on how to use the provisions should be available by Feb of 2008. To register for the international premium, companies need to complete the existing registration form and provide information where specifically asked on the ATO schedule.
3. Recent Legislative Changes.
There have been some changes recently to the legislation on the R&D concession. These are:
(a) it is no longer a requirement to elect the R&D tax offset in a company's original income tax return - this can be done by amendment, subject to registration of the company and its activities
(b) changes to eligibility to the offset in relation to both the definition of exempt entities and minimum spend (different if the expenditure is incurred relates to an RRA)
(c) distribution of the 175% premium concession is no longer calculated on a group basis comparison to the previous year's incremental expenditure, but on a group basis comparison to the three year average.
4. Compliance matters.
(a) ATO - there will be an increased focus on R&D tax offset claims as well as a focus on the 175% concession (this is the case because the number of 175% claimants increased significantly over the last year). One example provided about the R&D tax offset focus was that the ATO is looking at the treatment of expenses and accruals. The ATO is also looking at a case involving s73CA ITAA 1936 - specifically in relation to an engineering services company and whether there was a guaranteed return to investors for undertaking R&D which was the provision of services. Other issues highlighted were around s73B(9).
(b) AusIndustry - the Top 30 reviews should recommence in 2008. The areas highlighted by AusIndustry were routine product development and lack of documentary evidence. The industries currently being targeted include manufacturing (food, automotive and engineering), mining and IT.
Please feel free to contact us if you wish to discuss this further.
