A common question we have from our software and tech clients is, what is the process of claiming the Research and Development tax Incentive, where do we begin? Unfortunately this has never been spelt out before, so here goes:
For a software company that has not claimed before it will go something like this:
Quick claim overview process:
Before we proceed to claim with a client, we will do a quick overview process to make sure that the scheme is right for them. This involves having a look at the entity that we are claiming through, the expected R&D projects and the expected R&D expenditure. At this point we want to be able to give a rough guide as to what the company will get out of it and whether it is worthwhile claiming that year.
Companies will not claim for many various reasons, perhaps they are not doing R&D in that year, or they don’t have enough expenditure to warrant claiming or they have the wrong entity type for claiming. When a company is not able to claim, we try to provide as much assistance as we can to boost their chances for a claim in the future year.
R&D Project Meeting:
The next step is to conduct an R&D project meeting with the key members of the clients technical staff. This meeting is designed to bring out all of the technical detail we need to be able to write up the technical descriptions of the R&D claim. This part takes approximately 1 hour for each project. We gather the information from the project meeting to write up the project descriptions that will go into the claim form.
Another key part of the project is to determine the correct amount of expenditure related to the projects activities. With the information gathered from the project meeting, timesheets and financial information we can determine the correct amount of expenditure to claim.
R&D Claim form:
Once we have completed the project descriptions and the client is happy as to the accuracy and completeness of the descriptions we will enter them into the R&D Claim form along with the estimated expenditure and company details. The R&D Claim form is then electronically submitted to Ausindustry.
R&D Tax Schedule:
The benefit of claiming the R&D is obtained through the tax return. The mechanism for including R&D in the tax return is the R&D tax schedule. The R&D Tax schedule requires the registration number provided by Ausindustry, which arrives anywhere from a few days to a few months after the lodgement of the R&D claim form. We then prepare the R&D Tax schedule, which we provide to your tax accountant along with a letter that explains how to enter the tax schedule details into your tax return.
That is the process, feel free to get in touch with us to kick start it for you.