It is one of the first questions a company asks before its first claim: can our accountant just do it? This article is for business owners and finance leads weighing that up. The honest answer is that a claim has two halves, and most problems come from one person doing the half they do not know.
The two halves of a claim
The activities. Whether the work is R&D at all: what the team did not know at the start, the hypothesis, the experiments and what was learned. This is what AusIndustry registers and reviews, and it is written in the language of the science or engineering, not of tax.
The money and the tax. What was spent on those activities, which costs belong in the claim, which offset applies, how it sits with the company’s losses, franking and group, and how it goes into the tax return. This is what the ATO looks at.
What a good accountant brings
- The company’s books, so the expenditure is complete and agrees with the accounts.
- The group picture, which decides aggregated turnover and which offset applies.
- The tax position: losses, franking, other grants and how the offset changes them.
- The tax return itself, prepared so the R&D schedule and the return agree.
What an R&D specialist brings
- A judgement on which activities qualify as core or supporting R&D, and which do not.
- Activity descriptions written the way AusIndustry assesses them, without overstating or underselling the work.
- Records set up so the evidence exists when a review asks for it, months or years later.
- Experience of reviews, findings and the rules that change from year to year.
What goes wrong when one side does both
When only the accountant does it, the activities tend to be described in general terms that do not show the uncertainty or the method, which is exactly what a review picks apart. When only an outside R&D consultant does it, the figures can drift from the accounts, the offset can sit badly with the tax position, and a fee set as a percentage of the refund pulls the claim the wrong way. We cover what to look for in choosing an R&D adviser.
Neither is a criticism of the people involved. It is two kinds of expertise, and the claim needs both talking to each other.
How we do it
Prime Innovation is the R&D practice inside a chartered accounting firm, so both halves are prepared together: the activities by our R&D team and the expenditure and tax by our accountants. If you already have an accountant you are happy with, we work alongside them on the R&D and hand them what they need for the return.
Questions we are asked
Can my accountant prepare my R&D Tax Incentive claim?
Prime’s view is that an accountant can prepare the expenditure and tax side well, but the activity side needs R&D expertise. A claim that holds up under review needs both, working from the same records.
Do I need an R&D consultant if my accountant is experienced?
Prime’s view is that it depends on whether your accountant regularly prepares R&D activity descriptions and has been through AusIndustry reviews. If not, the activity side is where the risk sits.
Should an R&D adviser charge a percentage of the refund?
Prime’s view is no. A percentage fee rewards a bigger claim rather than a correct one, and the company carries the risk if it is reviewed. A fixed fee agreed in advance avoids that.
Talking it through
If you are deciding who should prepare your first claim, or your current arrangement is not working, we are happy to talk it through. See our R&D Tax Incentive advisory or 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.
