An advance finding is AusIndustry’s binding decision on whether an activity is eligible R&D, made before the claim rather than after it. This article is for companies with a large program, or one that sits close to the line, that want certainty before an offset goes into a forecast, a set of financial statements or an investor’s model.
What an advance finding is
You describe the activity, why its outcome cannot be known in advance and how the work will be done. AusIndustry decides whether it is core R&D, supporting R&D, or neither. A favourable finding binds both AusIndustry and the ATO on that question for the activity as described, for the year of the application and up to the two years after it.
What it does not cover
- The money. A finding settles whether the activity is eligible, not how much was spent on it or whether the expenditure is right. The ATO can still look at the claim amount.
- Work that changes. It binds the activity as described. If the project moves in a different direction, the new work is not covered.
- The registration. The activities still have to be registered each year, within ten months of the year end.
When it is worth applying
- A large or multi-year program, where a review finding against you years later would unwind a significant sum.
- Activities close to the line, such as software that sits near the internal administration exclusion, or supporting activities whose link to the core work needs to be made plainly.
- A board or auditor relying on the offset in forecasts or financial statements.
- A raise or a sale, where an investor or buyer will want to know the claim stands up.
For a small, clear claim it is usually more effort than it is worth. Good records kept as the work happens do most of the same job.
How long it takes and when to apply
The application asks for the same thinking a strong registration does: the knowledge gap, the hypothesis, the experiments planned and the evidence that will be kept. Allow several months for a decision, and apply early in the year the work is done so the finding is in place when it matters. The department sets out the current application timing on business.gov.au.
A finding that goes against you is not the end of the matter. You can ask for it to be reviewed, and the reasons usually show what would need to change for the activity to qualify. Our guide to AusIndustry reviews covers what happens when a claim is looked at after the event instead.
Questions we are asked
What is an R&D advance finding?
Under the R&D Tax Incentive, an advance finding is AusIndustry’s binding decision on whether an activity is core R&D, supporting R&D or neither, made before the claim is lodged.
How long does an advance finding last?
The AusIndustry rule is that a finding covers the income year of the application and can cover up to the two years after it, for the activity as described.
Does an advance finding confirm how much I can claim?
No. It settles whether the activity is eligible, not the amount spent on it, and the ATO can still review the expenditure in the claim.
Is an advance finding worth it for a small claim?
Prime’s view is that it usually is not. For a small, clear claim, good records kept as the work happens give most of the same protection for far less effort.
Deciding whether to apply
If your program is large, or a board is about to rely on the offset, we can tell you whether a finding is worth the effort and prepare it with you. Book a time with us.
How we can helpR&D Tax Incentive advisory Eligibility, registration with AusIndustry and the claim itself, prepared with the records a review would ask to see.
