On 11 May 2021, the Government announced that the Board would undertake a review to evaluate the dual-agency administration model for the Research and Development Tax Incentive (R&DTI). The purpose of the review is set out in the Terms of Reference below.
Terms of Reference
The R&D Tax Incentive (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 the ATO being responsible for the administration and processing of R&D tax offset claims, and IISA responsible for registering companies' R&D activities.
The Board of Taxation (Board) is 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 may 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 should:
- analyse 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;
- consult 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;
- consider 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
- identify 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, are outside of the scope of this review.
The Board is asked to report back to the Government by 30 November 2021.
Stakeholders are invited to provide early feedback by way of an informal email on key issues to RandD@taxboard.gov.au. If you would like further information, please contact the Board of Taxation Secretariat at RandD@taxboard.gov.au or +61 2 6263 4366.