Posts Tagged ‘ATO’

Research and Development (R&D).

Posted on: March 10th, 2020

Who is R&D For?

Many company developing novel products or services will spend hundreds of thousands of dollars, without realising they might be able to get government assistance in the form of an R&D subsidiary through AusIndustry and the ATO.

Who is Eligible?

If you have a company and you are researching and developing a novel product or service, that is you are creating new knowledge, then you should consider applying for the R&D Tax Incentive.

Applicants need to self-assess their eligibility for the R&D Tax Incentive. As a self-assessment program, companies assess for themselves whether their activities satisfy the definition.

What Can You Get?

If you are eligible, you can get a 45% refundable tax offset for eligible companies with an aggregated turnover of less than $20 million per annum.

What Activities are Eligible?

Activities are eligible if they meet the definition of R&D activities. This includes activities whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that: a) is based on principles of established science; and b) proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions.

Could the Outcomes Have Been Known in Advance?

The definition requires that the outcome of the experiments could not have been known or determined in advance on the basis of current knowledge, information or experience. This requirement will not be satisfied if: a) experiments merely confirm what is already known; or b) the outcome of the experiments could be deduced or determined by a competent professional in the field on the basis of current knowledge, information or experience.

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ATO review of the Direct Selling / MLM industry

Posted on: March 27th, 2017

It has come to my attention that the Australian Taxation Office (ATO) is about to conduct a review of the direct selling industry. In particularly they are going to select 12 companies and review the entitlements of that companies independent salespeople (agents) to be registered for an Australian Business Number (ABN).

I have spoken with the ATO Assistant Director and she has informed me that the ATO will pick 12 companies at random (some of which will be members of the Direct Selling Association).

The purpose of this review is for the ATO to establish a position in relation to ABN entitlement for independent salesperson operating within the direct selling industry. The aim will be to develop case studies that can be used by the direct selling industry to outline when it is appropriate to have an ABN and when it is not appropriate.

The ATO have advised me that they are looking at:

  • The entitlement of independent salespeople to an ABN;
  • The treatment of good and services tax (GST) by independent salespeople;
  • The treatment of withholding tax where there is no ABN; and
  • Whether independent salespeople are actually operating independently or should they be classed as employees.

I expect the review to start in the next month and most likely to complete in the next 12 months. At this state I am not aware of which direct selling companies are going to be reviewed, though as this is an important issue I wanted to bring it to your attention. This is also a good opportunity to revisit the entitlement for an Australia Business Number (ABN).

For example, while becoming an independent salesperson (agent) can also include the added benefit of being able to purchase products at a discount while also receiving commissions. A genuine business opportunity can usually be characterised as having some of the following:

  • The activities performed have a commercial character and they are being done for the purpose and likelihood of earning a profit;
  • The business has repeating transactions and appropriate business records are kept; and
  • There is a separate bank account, a registered business name and other registrations.

Where independent salespeople (agents) purchase products for personal use and for their immediate family, such purchases are private in nature and would not indicate the existence of a business opportunity. Furthermore, this could lead to a further legal issue where a business opportunity is being wrongfully promoted.

I will be sure to keep you informed of any developments and please let me know if you have any questions or require further information.