Expenditure you incur under contract to other parties
This type of R&D expenditure covers any eligible expenditure on R&D activities incurred under a contract to another party (other than an RSP). You cannot claim this type of expenditure on R&D activities unless your total notional deduction amount is at least $20,000. Contract expenditure may include contracts for:
- labour hire
- provision of services
- consultants working on R&D activities.
The contracts should show the nature of the work and its relation to your R&D activities. However, you may need to keep further records to show how work under the contract relates to your R&D activities. Although not exclusive, this may include:
- minutes of any meetings between yourself and the contractor
- progress reports from the contractor for the R&D activities.
To adequately establish the relationship between your R&D activities and the expenditure you have incurred under the contract, the Commissioner may need to look through the contract to establish the extent of the work done by the contractor on your behalf, particularly where you are not contracting at arm's length. You must keep sufficient records for this purpose.