Small businesses have been urged to get their paperwork together if they plan on applying for research and development tax concessions, with one expert saying thousands of businesses may be eligible without even knowing it.
The warning comes after the new R&D concession passed through Parliament last year after months of debate, although many experts still have plenty of problems with how the concession is calculated.
The new benefit will provide a 45% refundable offset to businesses with an annual turnover under $20 million, but BDO R&D partner Nicola Purser says too many businesses are afraid to apply.
“AusIndustry has a view to increasing claimants from the current level of 9,000 to 15,000. There are 6,000 businesses out there that could be eligible and aren’t claiming, so we’re trying to make them aware of all the concessions they could claim.”
Purser says with the deadlines approaching within the next few months for many businesses, they need to start getting some paperwork in order.
“There are many positive things about the changes for access to small companies, but there is a requirement they need to be organised, particularly in their record keeping.”
“SMEs need to ensure they have a good substantiation in records for all the activities they’re undertaking.”
Specifically, Purser says businesses need to make sure they separate out their core and supporting R&D activities, which are both very different and need to be explained under the new rules.
“Most companies know what they’re doing and can split it, but they’re not necessarily splitting them down to the activity level in paperwork.”
“By doing so, they’re not necessarily putting themselves in the best possible position to maximise their R&D claims.”
Purser warns the deadline is looming – businesses must lodge by April 30 for the old tax concessions. And if businesses want to apply for overseas activities, they can do so, but must apply in advance of the new financial year.
“There’s quite a bit that needs to be done. The application forms are quite detailed, and you want to make sure you’ve got everything in order.”
“There is money available, businesses just have to apply.”
Despite the bill passing last year, there are still some criticisms. The Australian Industry Group is still unsure as to whether it can help the manufacturing industry, and some experts have warned the need to “split” activities into “core” and “supporting” can be an administrative burden.