Research and development tax incentive: keeping records and calculating your notional deductions
This information explains the records you need to keep and helps you apportion your expenditure between R&D activities and non-R&D activities.
The following questions will help you self-assess your eligibility for the research and development (R&D) tax incentive:
- Did you incur the amount (or pay the amount if your expenditure is to an associate)?
- Is this amount eligible to be claimed under the R&D tax incentive?
- Is the amount incurred on R&D activities that are registered with AusIndustry (who act on behalf of Innovation Australia)?
- Have you apportioned your expenditure so that you are only claiming amounts to the extent they are incurred on R&D activities?
- Do you receive the major benefit from the R&D activities on which you incurred expenditure?
- Have you kept, or can you access, sufficient records to support your claims?
If you answer no to any of the above questions, you must ensure that you meet all of the requirements prior to claiming the R&D tax incentive.
If you work out that the expenditure is ineligible, you cannot claim the amount under the R&D tax incentive. However, you may be able to claim under another provision of the Act, for example, the general deduction provision in section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
The following information will help you to answer questions 4 and 6 above. If you need help with any of the other questions, see Research and development tax incentive - home.
When we say 'you' in this guide we are referring to a company that meets the definition of an R&D entity. More information about R&D entities is available from Eligible entities.
When we say 'R&D activities' in this guide we are referring to activities as defined in section 355-20External Link of the ITAA 1997 - that is, activities which are either 'core R&D activities' or 'supporting R&D activities'. More information about R&D activities is available from AusIndustry. See More information for AusIndustry's contact details.
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