A tax alert has been issued to businesses claiming the research and development (R&D) tax incentive, which includes specific advice for businesses claiming for agricultural activities.

The Australian Taxation Office (ATO) says it has noticed that some businesses conducting agricultural activities have been claiming the R&D incentive incorrectly.

The ATO and the Department of Industry, Innovation and Science have issued an alert encouraging businesses claiming the R&D Tax Incentive to check their eligibility and that their claims are correct.

A newly released taxpayer alert also includes some further examples of common errors made when calculating  the R&D Tax Incentive claims.

“While most do the right thing, we are seeing some businesses in these industries and their advisors improperly applying for the tax incentive where the activities and expenditure claimed don’t match with legislative requirements,” ATO Deputy Commissioner Michael Cranston said.

The arrangements under review apply to businesses claiming expenditure that is specifically excluded from the R&D Tax Incentive on the basis that it involves any of the following characteristics:

– an agricultural business is being carried on, often not by an entity that is eligible for the R&D Incentive, for example a family trust

– the operators of the agricultural business are approached by a promoter/R&D consultant recommending that the farming activities that are happening are eligible for the R&D Tax Incentive

– a company registers one or more activities for the R&D Tax Incentive

– the registered activities use farm products or practices across all or a significant part of a farm or farms

If you think you might be eligible to claim the R&D incentive:
• Check your eligibility using the ATO’s R&D checklist or check with your tax agent.
• Ensure you have kept records to support your claim and demonstrate the R&D activities being undertaken are eligible.
• If you think you have made a mistake when lodging an R&D claim, contact the ATO on 1800 177 006 or reportataxscheme@ato.gov.au, or seek independent professional advice.

Source: ATO