On 11 May 2021, the Government announced that the Board of Taxation (Board) would undertake a review to evaluate the dual‑agency administration model for the Research and Development Tax Incentive (R&DTI).
Background
The R&DTI program is a self‑assessment program that provides tax offsets for eligible company R&D expenditure. The stated objective of the program is to encourage industry to conduct R&D activities that may otherwise not be conducted, particularly where the new knowledge gained is likely to benefit the wider Australian economy.
The R&DTI is jointly administered by the Australian Taxation Office (ATO) and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER), with IISA responsible for registering companies' R&D activities and the ATO responsible for the administration and processing of R&D tax offset claims.
Terms of Reference
The Board was requested to evaluate the R&DTI dual agency administration model, with a view to identifying opportunities to reduce duplication between the two administrators, simplify administrative processes, or otherwise reduce the compliance costs for applicants.
The Board was requested to make recommendations to modify the R&DTI’s administrative model or to streamline existing administrative functions or processes. If the Board finds that taxpayers experience difficulty in understanding the different roles and responsibilities of the two administrators, the Board should consider whether education programs or communications would assist.
In conducting the review, the Board:
- analysed R&D administration models in other comparative jurisdictions and consider how the international experience may inform improvements to Australia’s R&DTI dual agency delivery model;
- consulted with taxpayers to obtain an insight into their experience during the registration and claiming process, including their understanding of the different roles and responsibilities of the ATO and IISA in administering the program;
- considered any new and streamlined processes undertaken by the two agencies in response to previous reviews of the scheme’s administration, such as the 2016 Review of the R&DTI and the recent Australian Small Business and Family Enterprise Ombudsman review; and
- identified the advantages and disadvantages of its recommendations, any potential financial impacts, and any trade‑offs between simplification and/or reductions in compliance costs and the scheme’s integrity.
Changes to the R&DTI’s broader policy settings, such as eligibility requirements or rates of support, were outside of the scope of this review.
Working Group
The Board appointed Board members Neville Mitchell and Chris Vanderkley to lead the review. They were assisted by a working group comprising industry experts, members of the tax profession, industry body representatives, and representatives of DISER, the Treasury, and the ATO. There was extensive consultation with a wide range of stakeholders in the business community throughout the review process.
Consultation
The Board published a Consultation Guide for stakeholder review and input, to understand their experience during the registration and claiming process of the R&DTI and consider opportunities to streamline existing administrative functions or process. It also posed a number of questions for interested parties to think about when formulating input to the review.
The Board held a number of virtual consultation meetings attended by representatives of tax, accounting and legal professions, industry body representatives, R&D tax consultants and users of the R&DTI program.
The Board thanks the many tax, accounting and legal professionals, industry body representatives, R&D tax consultants and users of the R&DTI program who participated in our consultation process.
Submissions received
The Board received 17 written submissions.
| Submitter | Download |
|---|---|
| 01 – Australian Industry Group (Ai Group) | 171KB |
| 02 – The Tax Institute | 185KB |
| 03 – Australian Investment Council | 227KB |
| 04 – Australian Small Business and Family Enterprise Ombudsman (ASBFEO) | 701KB |
| 05 – BDO | 646KB |
| 06 – Grant Thornton | 172KB |
| 07 – Deloitte | 236KB |
| 08 – Michael Johnson & Associates | 1.7MB |
| 09 – Chartered Accountants Australia and New Zealand (CAANZ) | 276KB |
| 10 – Cochlear | 571KB |
| 11 – KPMG | 1.7MB |
| 12 – Corporate Tax Association (CTA) | 5.7MB |
| 13 – EY | 207KB |
| 14 – PwC | 137KB |
| 15 – Tech Council of Australia | 151KB |
| 16 – DISER and the ATO (joint submission) | 3.7MB |
| 17 – RSM Australia | 180KB |
Board Report
The Board completed its report on 30 November 2021.
Government Response to the Board’s Report
On 29 March 2022, the Government announced the publication of the Review of R&D Tax Incentive Dual Agency Administration Model Report. The Government and relevant regulators will consider the Board’s recommendations and findings in the report.
Further Information
For further information about the Board’s report: Review of R&D Tax Incentive Dual Agency Administration Model, please contact the Board of Taxation Secretariat at taxboard@treasury.gov.au or 02 6263 4366.
