Media release 2009/68
The Tax Office this week released a taxpayer alert warning people to be cautious of investment schemes that abuse the research and development (R&D) tax offset.
These arrangements involve a company structuring contracts with a registered research agency to provide R&D services in order to access the R&D tax offset.
The agreement involves what appears to be a prepayment for services up to 13 months in advance, but the Tax Office is concerned the expenditure may not meet the requirements to be tax deductible.
Tax Commissioner Michael D’Ascenzo said while these arrangements may appear attractive, people should be warned the Tax Office will take strong action against these abusive schemes.
“These schemes have features similar to the mass-marketed schemes of the 1990’s,” Mr D’Ascenzo said.
“For example, in some cases funding arrangements are provided by a promoter-related entity creating a round robin cash flow which leaves little left for use in R&D activities.
“We are currently contacting around 70 entities involved in these arrangements asking them to review their circumstances and inviting them to make a voluntary disclosure where necessary.
“People who make a voluntary disclosure before we contact them for an audit will be entitled to a reduction in any penalties that may apply.
Companies wishing to make a voluntary disclosure should call the Tax Office on 1300 365 803.
More information
Taxpayer Alert 2009/21 R&D tax offset abuse through registered research agencies is available from the Tax Office website http://www.ato.gov.au/atp/
Taxpayers who are unsure about their own circumstances should seek independent advice or apply for a private ruling from the Tax Office.
TAXPAYER ALERT
Taxpayer alerts are intended as an ‘early warning’ to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment or about which it has concerns.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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