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I've been through the ATO R&D tax rebate process with a business that had Australian operations, you need audited financials and it takes months of due diligenc

I've been through the ATO R&D tax rebate process with a business that had Australian operations, you need audited financials and it takes months of due diligence. As an example, we applied to the ATO with preliminary totals for our 2014 R&D spending in January of 2015, updated our application in March with our audited numbers, answered questions from the ATO for 3 months, had our application approved in June, and the check wasn't cut until September or October. The credit from the ATO comes in the form of a check, but it's a prepayment against future tax obligations (you lost the tax-loss carry-forward you'd otherwise be able to claim to offset future profits). It's very useful for a startup since it's non-dilutive funding which can be used to get a lot of work done.

cba9 11y ago
So it's difficult to successfully get it, and there's a lot that could go wrong and, say, prompt a lawsuit or criminal case?
- mikeyouse 11y ago
  Yep, there are all sorts of forms about material representations and liabilities for false statements. It seems like a well-run program, our contacts with the ATO were very sharp and knew which questions to ask. You could tell they've ferreted out fraudulent applications before.
  - kiba 11y ago
    Sounds like something most companies won't touch with a nine foot pole.
    - mikeyouse 11y ago
      If you're honest, it's a great source of money. Our company was doing actual research to the tune of $50M spent in Australia (which was all VC money) so we got back something like $20M in non-dilutive additional financing. That $20M was "free" to us (but we lost out on the ability to write off $50M of losses against our future profits). It encouraged us to spend much more on research which mostly came in the form of salaries for Austrian employees. As long as you're not in the habit of lying to tax authorities, I don't know why every startup wouldn't take advantage.
    - girvo 11y ago
      They do, but hire big accounting firms to do so. This was my mother's job at KPMG, and where I work is going through the process at the moment.
      - mikeyouse 11y ago
        Yep, we had Deloitte AU helping with ours.
        mianos 11y ago
        Both crazy not to try and do it in house for the cost. Those guys are charging 15% and say you won't get it if you do it yourself. Any confident business person should be able to. It is meant to be self administered. It is a huge profit center for the likes of KPMG.
        Innercode 11y ago
        The R&D Tax scheme is a mix of law, tax and accounting. Like representing yourself in a legal matter or doing your own tax return, if its simple and straightforward you might be ok to claim yourself. However add a little complexity here or there and it helps to have someone who knows what they're doing to guide you through it. Its a self assessment scheme, like tax, anyone can lodge their own return and the ATO will pay out with only cursory checks. The real danger lies when you get audited, it can be especially dangerous for startups who have been claiming a few years, ignorant that they have not been claiming properly and are faced with an Audit by the ATO for multiple years of tax refunds. Generally once you add penalties to the tax refunds they must now pay back, the amount will end most startups. There are many reputable consultants in this space who are capable and cheaper than the big 4. I would suggest sticking to the big 4, Tier 2 Accounting firms and Boutique R&D Tax Firms. They should be registered tax agents and generally you would want to know if they have successfully navigated Ausindustry Reviews and ATO audits before. Avoid suburban accountants like the plague for these things.
        mikeyouse 11y ago

cba9 11y ago

So it's difficult to successfully get it, and there's a lot that could go wrong and, say, prompt a lawsuit or criminal case?

mikeyouse 11y ago
Yep, there are all sorts of forms about material representations and liabilities for false statements. It seems like a well-run program, our contacts with the ATO were very sharp and knew which questions to ask. You could tell they've ferreted out fraudulent applications before.
- kiba 11y ago
  Sounds like something most companies won't touch with a nine foot pole.
  - mikeyouse 11y ago
    If you're honest, it's a great source of money. Our company was doing actual research to the tune of $50M spent in Australia (which was all VC money) so we got back something like $20M in non-dilutive additional financing. That $20M was "free" to us (but we lost out on the ability to write off $50M of losses against our future profits). It encouraged us to spend much more on research which mostly came in the form of salaries for Austrian employees. As long as you're not in the habit of lying to tax authorities, I don't know why every startup wouldn't take advantage.
  - girvo 11y ago
    They do, but hire big accounting firms to do so. This was my mother's job at KPMG, and where I work is going through the process at the moment.
    - mikeyouse 11y ago
      Yep, we had Deloitte AU helping with ours.
      - mianos 11y ago
        Both crazy not to try and do it in house for the cost. Those guys are charging 15% and say you won't get it if you do it yourself. Any confident business person should be able to. It is meant to be self administered. It is a huge profit center for the likes of KPMG.
        Innercode 11y ago
        The R&D Tax scheme is a mix of law, tax and accounting. Like representing yourself in a legal matter or doing your own tax return, if its simple and straightforward you might be ok to claim yourself. However add a little complexity here or there and it helps to have someone who knows what they're doing to guide you through it. Its a self assessment scheme, like tax, anyone can lodge their own return and the ATO will pay out with only cursory checks. The real danger lies when you get audited, it can be especially dangerous for startups who have been claiming a few years, ignorant that they have not been claiming properly and are faced with an Audit by the ATO for multiple years of tax refunds. Generally once you add penalties to the tax refunds they must now pay back, the amount will end most startups. There are many reputable consultants in this space who are capable and cheaper than the big 4. I would suggest sticking to the big 4, Tier 2 Accounting firms and Boutique R&D Tax Firms. They should be registered tax agents and generally you would want to know if they have successfully navigated Ausindustry Reviews and ATO audits before. Avoid suburban accountants like the plague for these things.
        mikeyouse 11y ago