Latest News

Hot Issues
spacer
Estate planning considerations
spacer
5 checklists to support your business
spacer
Are you receiving Personal Services Income?
spacer
What Employment Contracts Does My Small Business Need?
spacer
The superannuation changes from 1 July
spacer
Hasty lodgers twice as likely to make mistakes, ATO warns
spacer
Landlords who ‘double dip’, fudge deductions in ATO crosshairs
spacer
Most Spoken Languages in the World
spacer
Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
spacer
Compare your business
spacer
2024 Year End Tax Planning Guide (Part 2)
spacer
ATO to crack down on rental income, WFH deductions this tax time
spacer
How to Draft a Standard Form Contract
spacer
GST, PAYG withholding a ‘significant portion’ of $50bn tax debt
spacer
ATO changes will make it harder for over 42,000 small businesses.
spacer
The Deadliest pandemics in History
spacer
Budget breakdown – Federal Government Analysis
spacer
Federal Budget 2024
spacer
Winners & Losers
spacer
2024 Year End Tax Planning Guide (Part 1)
spacer
Medicare levy surcharge OR basic health insurance ?
spacer
ATO warns of ‘serious penalties’ for unlawful tax scheme promoters
spacer
ACCC scam report
spacer
Employees taking more sick days - and it's getting worse
spacer
Foreign residents selling property in Australia
spacer
How much does negative gearing really cost – an overview and an opinion?
spacer
The Shortest-reigning Monarchs in History
spacer
FBT Reminder – Odometer Reading
spacer
ATO’s debts on hold campaign prompts new IGTO guidance
Article archive
spacer
Quarter 2 April - June 2024
spacer
Quarter 1 January - March 2024
spacer
Quarter 4 October - December 2023
spacer
Quarter 3 July - September 2023
spacer
Quarter 2 April - June 2023
spacer
Quarter 1 January - March 2023
spacer
Quarter 4 October - December 2022
spacer
Quarter 3 July - September 2022
spacer
Quarter 2 April - June 2022
spacer
Quarter 1 January - March 2022
spacer
Quarter 4 October - December 2021
spacer
Quarter 3 July - September 2021
spacer
Quarter 2 April - June 2021
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
ATO warns advisers against suspect R&D tax claims

Spending by associated entities or activities conducted overseas will be subject to increased scrutiny, the Tax Office says.

.

The ATO has released two taxpayer alerts warning about incorrect R&D tax offset claims involving spending by associated entities or activities conducted overseas for foreign-related entities.

Taxpayer Alerts TA 2023/4 and TA 2023/5 said taxpayers and advisers using either arrangement would be subject to increased scrutiny and possible penalties if the R&D tax incentives were being wrongly applied.

 

In a guidance update, the ATO said:

 

“We’re concerned these arrangements are being used to:

 
  • claim the R&D tax offset in situations where it would not otherwise be available, either at all or in the income year claimed by the R&D entity.
  • artificially increase the amount of the R&D tax offset claimed.”

Regarding TA 2023/4, “Research and development activities delivered by associated entities”, the ATO said: “We’ve identified arrangements where an entity incorrectly claims the R&D tax offset for expenditure incurred under an agreement with an associated entity who conducts those activities.”

Arrangements of concern included those where a “service provider”, which was usually an entity that conducted a group’s trading and research activities, operated as a contractor to provide R&D for the entity claiming the incentive. The service provider would not normally be entitled to claim the incentive and the body making the tax claim had little or no activity other than the specific R&D arrangements.

“In substance and effect, the refundable tax offset is the R&D entity’s only receipt and the only amount used to service the R&D entity’s payment obligations to the service provider,” the alert said.

Taxpayer Alert TA 2023/5, “Research and development activities conducted overseas for foreign related entities”, similarly outlines ATO concerns about arrangements where Australian entities claim the R&D tax offset for expenditure incurred on R&D activities conducted overseas.

“Arrangements of concern include where an R&D entity has purported that R&D activities were conducted for its own benefit, but those activities were instead conducted for a foreign entity that is ‘connected with’, or is an ‘affiliate’, of the R&D entity,” it said.

“We are concerned that R&D entities do not qualify for an R&D tax offset under Division 355 of the ITAA 1997 for expenditure incurred by them on R&D activities conducted overseas as the R&D activities were:

  • not conducted for the R&D entity, or
  • conducted to a significant extent for the foreign related entity, and that entity does not satisfy the statutory conditions for eligible R&D activities.”

The ATO said penalties could apply to participants in these types of arrangements although they might be “significantly reduced if the amendment request is treated as a voluntary disclosure”.

 

 

 

Philip King
18 December 2023
accountantsdaily.com.au

Liability limited by a Scheme approved under Professional Standards Legislation.
© O'Brien and Partners 2022 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922. Site by Acctweb