Changes to the 2022 Research & Development Tax Incentive Schedule
Here’s what you need to know:
The ATO has recently released its Research and Development Tax Incentive Schedule (NAT 73794) for the 2022 financial year. Legislative changes introduced in the October 2020 budget have seen the introduction of changes in the way R&D entities calculate and report their R&D tax offset expenses to the ATO for the YE 30 June 2022 compared to prior years.
Consequently, this has also resulted in some changes in R&D entity’s tax return. Changes to the R&D tax schedule apply for income years commencing on or after 1 July 2021; therefore for early balancing entities with an early balancing substituted accounting period, the new R&D tax schedule applies from 1 January 2022.
Specific label changes in the new ATO’s Research and Development Tax Incentive Schedule 2022 include additional reporting for:
Part B – Clawback Amounts
- R&D recoupment (item 7) – total amount of all R&D recoupment amounts that relate to expenditure for which the R&D entity has claimed notional deductions under the R&D Tax Incentive,
- Assessable balancing adjustment (Item 8) – Balancing adjustment events occur when the R&D entity stops holding a depreciating asset used in R&D activities, for example, when the entity sells the asset for which the termination value may be the sales proceeds of the R&D asset,
- Total clawback (Item 9) – Additional assessable income resulting from all clawback adjustments, including Feedstock adjustment amount, R&D recoupment amount, and Assessable balancing adjustment amount,
- Deductible balancing adjustments (Item 10) – when the termination value of the R&D asset at that time was less than the asset’s adjustable value,
Part E – R&D Tax Offset Calculation
- Disclosure of the company tax rate (R) and
- R&D intensity calculations (A) that take into account the total R&D expenses for the entity.
Instructions on how to complete the 2022 R&D Tax schedule are available online. We hope that the ATO releases numerical examples and additional guidance pertaining to the calculation of R&D recoupment amount, assessable and deductable balancing adjustments, and clawbacks under these amendments. Communication and guidance from the ATO will enable R&D entities to appropriately categorize and calculate eligible R&D expenditure and reduce any potential for compliance audits.
If you would like to discuss how Ryan can help you with the R&D Tax Incentive and minimize your tax compliance burden, then get in touch with us today.
– 2022 R&D Tax Incentive Schedule Changes –
- Scope your potential to claim various grant programs
- Assist with the preparation and lodgement of grant applications
- Review or provide a health check on your internally prepared grant applications
- Establish record-keeping practices as required under various grant programs
- Provide prepayment loans against future cash refunds under the R&D Tax Incentive
- Keeping industry informed on all new Government policy and grant initiatives
Don’t hesitate to give us a call.