Compliance program 2011-12

Research and development claims

Research and development (R&D) expenditure registered with AusIndustry in 2008-09 was $18.08 billion, a 21% increase from 2007-08.

We are concerned with a number of issues in regard to R&D claims including:

• normal business activities are being incorrectly classified as R&D activities
• companies are not capturing R&D expenditure on a contemporaneous basis, but rather claims are being calculated after the event by apportioning expenditure
• failing to apply specific R&D rules, for example the 'on own behalf' rules and feedstock rules
• non-capitalisation of labour involved in the construction of R&D assets
• unsubstantiated and ineligible claims of the R&D tax offset.

We will focus on producing guidance and ATO-view products to ensure taxpayers understand our view of the law and to encourage voluntary compliance. In the large market we plan to undertake reviews and audits of around 30 companies.

Sections within Large businesses

• Good tax corporate governance
• Working together
• Obtaining certainty
• Cooperative compliance
• Corporate restructures mergers and acquisitions
• Foreign residents
• Inappropriate outcomes involving consolidation
• Profit shifting
• Private equity - exiting Australia
• GST and international and cross-border transactions
• Non-resident withholding tax
• Stapled group financing
• Taxation of financial arrangements (TOFA)
• Financial supplies and GST
• Foreign partnerships
• Black-hole expenditure
• Exploration expenditure
• Tax and capital losses
• Research and development claims
• Property transactions and GST
• Superannuation funds
• Alternative fuels