R&D debacle: Will Aussie startups be dissuaded from taking advantage of tax incentive?

A crackdown on the government’s research and development (R&D) tax incentive scheme could deter early-stage startups from making claims altogether, to the detriment of innovation in Australia.
Earlier this week, the Australian Financial Review reported Australian startups including Airtasker have been ordered to repay millions in R&D tax incentives claimed in previous years.
According to the report, Airtasker’s claims from 2014 and 2015 have been audited and rejected, meaning the startup is faced with the possibility of repaying millions of dollars, as well as a 75% penalty.
The crackdown is largely in response to R&D claims for software development. In February 2017, the Australian Tax Office (ATO) and Innovation and Science Australia issued an alert announcing the tax office was reviewing the incentive, suggesting claims were being made on activities that were not eligible.
The alert specified the incentive should not be claimed for developing or upgrading software, using software to develop knowledge, or activities replacing manual work with software.
At the time, the ATO specified: “In order to be eligible, there must be an experiment or experiments being carried out for the purpose of generating new knowledge. Read more

Stephanie Palmer-Derrien - SmartCompany - 11 December 2018

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