International Indigenous Football Foundation Australia, now in liquidation, was fined over $4 million for encouraging eight of its clients to apply for the R&D tax incentive, in which they were ineligible. The Federal Court found the company to have breached promoter penalty laws and action was taken against 10 claims that amounted to over $3 million in R&D tax refunds.
The ATO is working to recover the money and the eight companies have also been penalised in addition to repaying the money claimed.
Be wary of who you approach to assist with your R&D claim. With tax law, the company will also be penalised, even if they are using an adviser. R&D claims are being heavily scrutinised and fraudulent claims have resulted in jail time. Will Day, the ATO Deputy Commissioner, has stated that misuse of the R&D tax incentive is a top priority for the Serious Financial Crime Taskforce.
The R&D tax incentive application is complicated and many businesses are not sure which parts of their project are eligible to claim. The eligibility criteria is not simply black and white. For instance, the creation of new knowledge must involve new knowledge that can be applied on a global scale as opposed to being location specific. Another common example includes software companies using existing code and APIs to develop a custom solution, rather than developing their own. It is recommended that businesses look for an established R&D specialist to assist with their claim, rather than try to understand everything and claim themselves.
Ausgrant are R&D tax incentive experts and take a conservative approach. We will advise the client of any activities we deem to be ineligible. Contact us for a free assessment. There is minimal risk to you, as you only pay for our services after you have received your refund.