Record keeping in R&D Tax Incentive SchemeAt Innercode, we’re all about making things easier for our clients — before, during and after the process of lodging their R&D claim.  One of the areas of contention in recent discussions around the R&D Tax Incentive Scheme has been the rising number of suspect claims.

With increased scrutineering of procedures, companies cannot afford to be in a position which will leave them open to audit failure. This is especially frustrating in circumstances where failure to pass an audit is the result of careless or non-existent record keeping.

As a rule, your R&D claim is only as good as the records that underpin in. Considering how you can record the ways in which you have addressed the knowledge gap is a good place to start. For example, how are you documenting the results of your searches on the existing technology related to your project? During an audit, either commissioned by AusIndustry or the Australian Tax Office, you may be asked to provide key dates to support your claim. Documents must be dated in order to be considered adequate evidence of the timing of the research. In order to prove eligibility you must be able to demonstrate that what you are bringing to the market is different.

Dated documentation showing the material that was available when you started the project is necessary to back up your claim. Project reviews can be conducted two to three years after a claim has been lodged; even for individuals with excellent capacity to store corporate memory in their heads this task is near impossible. In our experience we find startups to be most at risk. It’s easy to under-prioritise record keeping when you’re focused on the more immediate tasks.  Holding onto electronic records of conversations or creating dated audio files of key discussions can help to build a dossier to back you up in the event that you are audited in the future.

Another area to consider for record keeping is the experimentation process. It’s important to record the major attributes of your core activity; recording failures in this instance is as important, if not more important than your successes.

For more information about record keeping check out the YouTube clip from AusIndustry.

To find out more about how the R&D Tax Incentive Scheme can work for you and to discuss your eligibility, book your free Innercode consultation today.

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