The Government announced as part of the 2021-22 Budget that the Board of Taxation would undertake a review to evaluate what is termed the dual-agency administration model for the R&D tax incentive. The Board has released details of the review and has called for submissions.
Background
Currently, the R&D tax incentive is jointly administered by the ATO and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER). The ATO is responsible for the administration and processing of R&D tax offset claims, while IISA is responsible for registering companies’ R&D activities.
Purpose of review/terms of reference
The Board is to evaluate this dual agency administration model, with a view to:
- identifying opportunities to reduce duplication between the 2 administrators;
- simplifying administrative processes; or
- otherwise reducing the compliance costs for applicants.
The Board may make recommendations to modify the 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 2 administrators, the Board should consider whether education programs or communications would assist.
It should be noted that changes to the R&D tax incentive’s broader policy settings – such as eligibility requirements or rates of support – are outside of the scope of this review.
The Board advises that in conducting the review, it will:
- analyse R&D administration models in other comparative jurisdictions and consider how the international experience may inform improvements to Australia’s 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 2 agencies in response to previous reviews of the scheme’s administration, such as the 2016 Review of the R&T tax incentive; 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.
Timing and submissions
The Board is asked to report back to the Government by 30 November 2021.
Contact details are provided in the source document.
This article was first published in Thomson Reuters’ Weekly Tax Bulletin.
