ATO may deny R&D offset on JobSeeker payments

By Kris Gale

The ATO has released Draft Taxation Determination TD 2020/D1, setting out how the ‘at-risk rule’ (section 355-405 of the Income Tax Assessment Act 1997) applies to JobKeeper payments received by a company conducting activities eligible for the R&D Tax Offset.

In short, the ATO is of the view that eligible R&D activities subsidised entirely or in part by JobKeeper payments will not attract the R&D Tax Offset (in a proportionate sense) as the expenditure ‘at risk’ rule is triggered.

This has a number of implications for taxpayers in preparing their R&D Tax Offset claims, including those who have already submitted their claims for the financial year ended 30 June 2020.

It needs to be remembered that this is currently only in draft form and represents the Commissioner’s preliminary view.

The ATO is seeking feedback on the draft by 24 August 2020.

This comes as the Senate Economic Legislation Committee’s public hearings into the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 continue.

The committee has received 100, overwhelmingly negative public submissions on the bill, and is due to release its report in August.

Kris Gale is Chairman at Michael Johnson Associates.

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