BDO has reservations with latest R&DTI guidelines

21 February 2019

BDO Australia welcomes the R&D guidelines published today by the Government but note that they are largely a rehash of existing guidance material.

The guidelines relate to eligibility of claims for software activities under the Research and Development Tax Incentive (R&DTI).

BDO R&D Tax Partner, Nicola Purser said: “We do have some reservations on whether these guidelines will achieve their objectives.”

“The Minister has said that the majority of software businesses are trying to do the right thing, but some are claiming the incentive incorrectly.”

“We see this as an indication of how complex and difficult the claims process has been made rather than poor attention to detail on behalf of software businesses.”

“There is nothing new in terms of where software businesses stand compared with before the guidelines were published.

“The guidance shows that AusIndustry:

  • Do understand that software development can qualify as an eligible R&D activity,
  • Provides further clarity of the extent of activity that AusIndustry would deem to be eligible and the level of detail required to substantiate an applicant’s claim. 

“Importantly they clarify that just because the outcome of software development is innovative, it does not necessarily mean that the development activity would qualify as eligible R&D activity.

“It has been often said that the R&D tax incentive is the Government’s flagship program to support innovation but by the letter of the law, it does not.”