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ATO Release First R&D Tax Incentive Transparency Reporting Data

As now required by law, The Australian Taxation Office (ATO) has released its first annual Research and Development (R&D) tax transparency report on entities claiming the R&D tax offset.

The information the ATO published includes:

• name of the R&D entity claiming the R&D tax incentive and their ABN/ACN;
• entity’s total expenditure on R&D (known as total notional deductions claimed – label Z in Part A of the R&D tax incentive schedule) less any feedstock adjustments (label B in Part B of the R&D tax incentive schedule).

This claimant information is published on data.gov.au;

Additional analysis of the information is on the ATO website.

The rationale behind the change is to enhance transparency and accountability.

The introduction of this requirement has sparked a range of opinions within the industry.

Swanson Reed has mixed views on the measure:

• Benefits from the disclosure changes may include:

• • Enhanced Transparency allowing stakeholders to understand how public industry funding is being utilised;
  • Competition and Benchmarking: The mandated disclosure provides an opportunity for companies that invest heavily in R&D to take pride in their commitment to innovation, which in turn may potentially attract investors and collaborators;
  • Accountability: Some view that investment on business expenditure on R&D is part of being a good corporate citizen, and this measure may enhance accountability in this regard.

• Conversely, there are Concerns around the disclosure changes:

• • Distorted Information: Some companies that have a large R&D expenditure investment may choose not to claim R&D expenditure under the program (or not to register all expenditure) due to various reasons, including resource constraints or commercial decisions such as accumulated tax losses. The inaccurate representation caused by the mandated disclosure could lead to a distorted picture of a company’s actual R&D activity;
  • Media Scrutiny: Companies that receive significant industry assistance through the R&D Tax Incentive might become targets for media scrutiny, whether deservedly or not;
  • Privacy: Some companies may prefer that their R&D Expenditure or any details of their taxation affairs not be published;

Regardless of anyone’s thoughts on the disclosure changes, they are now the law, and stakeholders should be aware of the requirements.

Please get in touch with our office if you require assistance, would like to speak to someone about a potential claim, or check out our website for more information.