Update R&D Tax Incentive: Critical requirements for EOFY

Matt White, Director - RD Tax + Grants

Update R&D Tax Incentive: Critical requirements for EOFY

With the 2025 financial year end just weeks away, Australian companies claiming the Research & Development Tax Incentive must ensure certain steps are taken to maximise their R&D opportunities. Recent ATO scrutiny makes compliance more important than ever.

Three Key Areas Requiring Immediate Action

Associate payments – ATO's under ATO Scrutiny

The ATO's recent review of 200 R&D registrations has identified associate payments as a major compliance issue. To claim R&D expenses paid to related entities:

• Pay by June 30: All associate expenses must be physically paid before year-end – not just invoiced
• Allow processing time: Initiate payments several days early to avoid delays
• Document everything: Maintain detailed records linking invoices to R&D activities and proof of payment.

Remember: Unpaid amounts can carry be forward but can’t be won't generate refunds in your 2025 return.

Overseas activities – Advance approval essential

Overseas R&D expenditure is generally ineligible unless pre-approved. To claim overseas activities for FY25:

• Submit your Advance/Overseas Finding before June 30, 2025
• Demonstrate one of four permitted reasons: access to unique facilities, expertise, populations, or geological features; or compliance with biosecurity requirements
• Ensure "on-own-behalf" provisions are met for associated overseas entities

Without advance approval, overseas R&D costs cannot be claimed.

Record Keeping – R&D Program compliance

Strong documentation is critical to making R&D claims. Essential records include:

•        Contemporaneous evidence of R&D activities conducted
•        Clear links between claimed costs and registered activities
•        Contractual arrangements proving services were actually delivered

Use the year-end period to consolidate your R&D documentation and strengthen record-keeping processes for future claims.

Next Steps

Don't let valuable R&D benefits slip away due to missed deadlines or inadequate documentation. With intensified ATO scrutiny, proper compliance is essential for protecting your claims.

Need guidance on your R&D Tax Incentive claim? Contact our expert R&D consultants for a tailored consultation before the June 30 deadline.

Feel free to contact me:  e: matt@mjwadvisory.com.au | ph: 0404 491 524 | w:www.rdtaxandgrants.com.au