Australia

Details

  • Service: Tax, R&D Incentives
  • Industry: Agribusiness
  • Type: Regulatory update
  • Date: 21/06/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Scott Olding

Scott Olding
Partner, Tax

+61 2 9335 8745

scottolding@kpmg.com.au

R&D Tax Incentive - Agrifood guidance 

by Scott Olding, R&D Tax Specialist

The new Research and Development (R&D) Tax Incentive program changes the definition of R&D activities. Claimants are now required to differentiate and disclose core and supporting R&D activities within the R&D application for registration. Over time, AusIndstry has released different industry specific guidance products using practical examples to provide claimants with greater clarity around the eligibility requirements. For example, an Agrifood guide was released in April 2013.

This guide uses cases studies and commentary to provide AusIndustry’s perspective on the differentiation between core and supporting R&D activities. Activities such as the development of new watering routines and/or planting density strategies (to generate greater crop yields), may be considered to be core R&D activities.

 

The guide however distinguishes activities such as the development of prototypes (to be used in trials for the development of new processes), as being supporting activities.

 

To reiterate, these examples are AusIndustry’s perspective on the differentiation between core and supporting activities. All claimants should assess their activities as core or support activities against the R&D legislation. The distinction is, however, important given the operation of the dominant purpose test which must be applied when supporting R&D activities are specifically excluded, or are directly related to the dominant purpose of producing goods or services.

 

The guide also comments on how the new feedstock provisions may apply when companies make the business decision to sell or use the immediate product of their experimental activities /trials to dilute some of the additional R&D activities claimed.

 

KPMG is working with a range of companies across the Agrifood sector to implement this new R&D Incentive program and assess their activities against the R&D legislation. This experience can assist claimants within the industry to identify and address key R&D compliance issues.

 

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