ATO consultation on tax incentives for early stage innovation companies

The Australian Taxation Office (ATO) has released the following discussion papers on technical issues associated with the tax incentives that apply to investors in early stage innovation companies (ESICs) from 1 July 2016:

  • when must a company be a 100 per cent subsidiary for its income and expenses to be accounted for under the ESIC 'early stage' test,
  • 3-year expense test and whether expenditure incurred after the test time being the time when shares are issued to investors but still in the 'current year', are to be included, and 
  • The meaning of the phrase 'incurred total expenses' in the innovation company tests. 

Comments can be made until 10 April 2017.

Addendum to R&D alert on software development projects

An Addendum was made to Taxpayer Alert TA 2017/5:Claiming the Research and Development Tax Incentive for software development activities to further clarify when routine testing steps in software development projects should not be claimed and when they may be eligible Research and Development (R&D) activities.