The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has expressed concern regarding reports that the government clawed back $200 million in the 2018 financial year from businesses who have claimed the R&D Tax Incentive and has been investigating the impact of the ATO’s policy and enforcement practices on small businesses.
The ASBFEO noted a number of complaints from small businesses about unfair treatment in relation to their research and development tax incentive claims by the ATO and AusIndustry.
“Of particular concern are audits going back several years, which have resulted in the ATO demanding businesses repay the R&D Tax Incentive, often with a severe penalty applied,” Ms Carnell said. “Unfortunately, some of these businesses have been told to pay back the tax benefit years after the R&D has been completed. This is well after they received the refund from the ATO and reinvested that money back into the business.”
Ms Carnell stressed that most of the businesses were genuine in their belief they were undertaking R&D and that their claims were totally justified.
“We’ve had additional feedback from software industry representatives that the interpretation of the laws by AusIndustry and the ATO, regarding the eligibility of software claims, has become more rigid. These issues have prompted a review to clarify the R&D Tax Incentive legislation and how it’s enforced,” Ms Carnell said.
The ASBFEO pointed out that certainty is essential if the R&D Tax Incentive is to fulfil the purpose of the legislation, which is to incentivise small businesses to invest in R&D.
“For Australian small businesses to continue to thrive, the government needs to support investment in science and research to drive innovation and growth.”
The ASBFEO will deliver the findings of its investigation in a report to be published shortly.
