It is that morning when you get out of bed feeling great, you’ve got big plans for the day and the weekend coming upon you that you get a knock at the door. You answer it. Who stands in front of you? A couple of slick government agents who appear to mean business. They deliver the news that your time is up and they will be conducting a review on the last two years of R&D claims for your entity.
Ok, maybe it’s not quite as scary and confronting as that. At least it shouldn’t be if everything’s above board and you’ve done your record keeping. Something else that may make it less scary is knowing how the process works.
The process goes like this:
The AusIndustry Review Board decides that your entity is to be reviewed. Under Section 30A of the Tax Laws Amendment (Research and Development) Bill 2010, written notice of this decision, the reasons for the decision and the entity’s right to have the decision reviewed under Division 5 of the Bill is required. However, if the Board has failed to give this notice it does not affect the validity of the underlying decision. You will still be reviewed.
What do they want and what will they look at? Section 5.146 of the Bill states the following:
- Decisions relating to applications by R&D entities to register activities as R&D activities;
- Decision relating to registration of R&D activities, including variations and revocations of registrations;
- Decisions relating to findings that activities are or are not R&D activities;
- Decisions relating to applications or registrations of Research Service Providers (including variation, revocation and extensions of time); and
- Decisions to provide an extension of time for making an application or for providing further information.
When the review has taken place, the Board is not limited to considering only the information it had at the time the reviewable decision was made. It is able to consider new information that has come to light since. Any new information that an entity wishes to be considered as part of the review should be provided to the Board as part of the application for internal review. This gives the company being reviewed an opportunity to dispute the decision.
The Board must take one of the following steps in their decision process:
- Confirm the reviewable decision;
- Vary the reviewable decision; or
- Set aside the reviewable decision and make a new one in its place.
If the Board does not make a decision within 90 days of receiving an application for review, then the Board is taken to have come to a conclusion regarding the reviewable decision. The Board will then be required to notify the entity that sought the review.
If the entity is not satisfied with the review by AusIndustry, applications may be made to the Administrative Appeals Tribunal for review of that internal review decision which comes in accordance with Section 29 of the Administrative Appeals Tribunal Act 1975.
What we do for our clients:
At Innercode we believe that prevention is better than cure. We work with our clients to ensure the correct preparation has been done to make a visit from the Reviewers run as smoothly as possible; we aim to help you avoid nasty surprises.
Three tips to survive your next review:
- Have the right activities registered. This is a key part of the review defence; registering activities that do not meet the standards of the scheme can set you on a path to review failure.
- Have records to underpin your activities. In many cases it’s a matter of keeping any development records you have- don’t throw anything out! A review can go back to five years so it pays to become a hoarder.
- Be ready. The process of a review can take some time. We need to go through the questions that need to be answered, gather more information and piece it all together.
We recommend that all applications are backed by clear, accurate working papers to support the R&D claim. That’s why we ask all those questions. The more questions we ask up front, the fewer you’ll be struggling to find answers for when you get the reviewers turn up. Instead, you’ll be organised, relaxed and ready to lodge your next claim.