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R&D Incentive Tax Crackdown For Software Claims

Reports have emerged in the media recently of software development companies that have been subject to adverse R&D Tax Compliance proceedings:

Whilst the benefits available under the R&D Tax Incentive are significant, these reports affirm the need to ensure R&D claims are completed with diligence, and in accordance with the current reporting expectations.

Recent publications from ATO and AusIndustry on software development activities have highlighted current regulatory compliance focuses, which include the need to:

  • Detail the specific hypothesis, or central idea to be tested during each core R&D activity;
  • Explain how software development activities generate new technical knowledge, and are not merely applying existing knowledge to a new commercial application;
  • Explain why the outcome of the activities could not have been determined in advance based on existing knowledge;
  • Detailing the process for conducting the experiments including observations and conclusions;
  • Ensuring only core and supporting R&D activities within a project are registered, rather than registering all project a project’s activities;

Please get in touch with us if you require assistance with the documentation and assessment of your R&D Activities.

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