R&D expenditure claims tip $11.2bn, ATO report reveals
Businesses are typically claiming just under $1 million in research and development claims, according to the ATO's R&D tax incentive transparency report.
The ATO has released its R&D tax incentive transparency report that revealed significant investment in R&D activities by businesses in the 2021–22 income year.
The report indicated that while public and multinational businesses invested the most in R&D, claiming a total of $4.9 billion in expenditure, small businesses still engaged heavily with a total of 5,574 entities involved in the R&D program over the 2021–22 income year.
Overall, 11,545 companies claimed R&D expenditure in the 2021–22 income year, with Australian-owned companies accounting for 97.8 per cent of this year's population.
The ATO said the professional, scientific and technical services industry, which includes businesses such as scientific research, computer system design and accounting services, invested more than any other industry, accounting for 43 per cent of the claims.
The data also revealed the average amount being claimed with public and multinational businesses claiming $3,095,495 on average while privately owned and wealthy groups claimed $931,824.
Small businesses typically claimed much less, with the average claim amounting to $395,191.
The average claim across all groups claiming R&D expenditure was $972,145, according to calculations in a recent update by Deloitte.
The ATO said in the report that it remains focused on ensuring the integrity of the R&DTI program and will continue to work closely with the Department of Industry, Science and Resources (DISR) on behalf of Industry Innovation and Science (IISA) to administer the program.
"The ATO and DISR regularly conduct compliance reviews and audits of R&D entities to ensure the ongoing integrity of the R&DTI program," the Tax Office said.
"While it is a self-assessment program, we have sophisticated systems in place to identify non-compliance. This includes a specific focus on larger businesses and high-expenditure claims, as well as those claims brought into focus through our risk-based approaches, including possible fraudulent claims.
In line with the ATO's general compliance approach for the tax and superannuation systems, the Tax Office said it was focused on making it "easy for people to comply and hard for them not to".
The ATO said it would continue to regularly engage with R&D entities to ensure they get it right through emails, and the release of Taxpayer Alerts, updated web content and news articles related to the program.
The Tax Office recently released two Taxpayer Alerts, Taxpayer Alert TA 2023/4 and Taxpayer Alert TA 2023/5, to warn entities and advisers about its concerns regarding incorrect R&DTI arrangements used to claim the R&D tax offset in situations where it would not otherwise be available and artificially increase the amount of the R&D tax offset claimed.
"We encourage R&D entities and their advisers to read any of our new material or guidance and consider if they need to contact us or make a voluntary disclosure by amending their R&DTI claim," it said.
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