An ‘Overseas Finding’ is required to claim the R&D Tax Incentive when R&D activities, which form part of an Australian R&D project, are undertaken overseas. Prior to this change, an Overseas Finding certificate was only valid for a period of up to 3 years from the original year of application. R&D entities needed to reapply for another Finding at the end of the third year, so that Innovation Australia is able to reassess the nature and compliance of the overseas R&D activity.
Now however, R&D entities with existing Overseas Finding certification will be pleased to know that this certification is sufficient and will remain valid for the duration of the overseas activity going forward.
AusIndustry and the ATO have recently announced that overseas findings apply for the duration of the offshore R&D activity, if the activity has not significantly changed in time. This gives R&D entities more certainty in their ability to claim the tax incentive and a lesser administrative burden in circumstances where there is no change to the overseas R&D activities being undertaken. Any overseas R&D activities that may have significantly changed, however, will still need to reapply for certification of the new R&D activities.
Companies wishing to seek a Finding for Overseas R&D activities need to meet the following requirements:
- The overseas activity must be covered by an advance finding that the activity is an eligible R&D activity
- The overseas activity must have a significant scientific link to core R&D activities conducted in Australia
- The overseas activity must not be able to be conducted within Australia because conducting it requires access to facilities, a population or specific geographical features not available in Australia or the external Territories.
- The amount (actual and reasonably anticipated) to be spent in all income years by the company and any other entities is less than the total amount (actual and reasonably anticipated) to be spent in all income years on the Australian core and supporting R&D activities.
For those R&D entities wishing to seek an Overseas Finding, applications must be submitted during the income year that expenditure relating to that activity is first incurred, with minor exceptions for incidental expenditure.