STEP 4: Record Keeping

Record keeping is an important part of any R&D project and also an important part of good business practice. If you register for the R&D Tax Incentive your need to keep records to demonstrate the work you register is eligible for support. Good planning combined with good business systems and processes improve the chance for a company to get the most out of their R&D investment.

​There are two types of record keeping required for the R&D Tax Incentive:

1 Activity based record keeping

Activity based records show that activities were actually carried out, and show how they are eligible core or supporting R&D activities.

The type of records that might be kept for activity based records include:

  • Notes from meetings with project and technical staff.
  • Business plans and approvals.
  • Results of background research and scoping.
  • Technical project documents, including the results of testing on the product, idea or service.
  • File notations and updated records to track the progress of an R&D activity.

2 Expenditure based record keeping

Expenditure based records justify expenditure claims for eligible R&D activities.

The type of records that might be kept for expenditure based records include:

  • Timesheets to verify the amount of time spent on R&D activities.
  • General ledger entries and invoices to verify the amount incurred on R&D activities and that include sufficient detail to link them to the R&D activities.
  • Spreadsheet or template that allows for eligible R&D costs to be consolidated into a format that allows for direct input into the ATO  R&D Tax Incentive Schedule.
  • Financial documents including records of expenditure that include sufficient detail to link them to the R&D activities.
 

Find an example relevant to your industry

 

 

BAKING STUFF (Examples of Activity based records)

  • Activity based recordsBakingStuff had production run sheets as part of its normal business operations. During its R&D project it simply added columns to these run sheets to record changes to ingredients, mixing times and speeds, baking conditions and taste.
  • An R&D Plan was developed to set out the objectives of their work and what they were trying to achieve.
  • Reports for each stage of the testing showing the level of dispersion of the fish oil in the loaves were also kept to show a systematic experimental approach was followed.

BAKING STUFF (Examples of Expenditure based records)

  • Expenditure based recordsExisting processes for accounting and project management were aligned to assist in identifying and costing eligible R&D activities.
  • Specific staff were responsible for coding expenses to eligible R&D activities.
  • File notes and timesheets were kept.
  • General ledger entries and invoices were apportioned and included sufficient detail to link to the R&D activities.

Biofnatics (Examples of Activity based records)

  • Activity based recordsRecords for the planning of the clinical trials, including the identification of potential clinics, surgeons and the regulatory approval process were kept.
  • A project plan that set out business aims and technical hypotheses, the design of the experiment and ultimately the observations and analysis of the results were developed.
  • Observations from the experiments were recorded.

Biofnatics (Examples of Expenditure based records)

  • Expenditure based recordsTo be eligible for an overseas finding, the actual and reasonably anticipated expenditure on overseas components could not exceed the actual and reasonably anticipated expenditure expenditure on Australian components. Therefore, Biofnatics was careful to keep expenditure records for all work undertaken overseas as well as in Australia.
  • Similarly, to be eligible for an overseas finding, Biofnatics had to show that the activities were not able to be conducted in Australia. The company kept records of its planning, including how the need for a larger sample size for Phase II trials was identified.

Enviroloo (Examples of Activity based records)

  • Activity based recordsLiterature research and records of consultation to show that the knowledge of how to build the larger system didn’t already exist and couldn't be worked out without experimental development were kept.
  • Dates of testing and the steps that were taken as part of those tests were recorded.
  • The data and results of the tests were recorded.
  • Minutes of project meetings were kept.

Enviroloo (Examples of Expenditure based records)

  • Expenditure based recordsReceipts for the equipment specially purchased for the activity.
  • Costs involved in preparing the tests were recorded.
  • Invoices for contractors involved in the construction and tests were kept with sufficient detail to link to the R&D activities.
  • Staff timesheets were recorded.

WindWake (Examples of Activity based records)

  • Activity based recordsResults of test runs of the new algorithm (including ‘failed’ tests) were kept.
  • An experimental log that detailed comments on prototypes including issues that arose and how they were solved was kept.
  • An electronic record of all correspondence including relevant emails between staff was kept.
  • Reports from the field testing including the method used, results and analysis were kept.

WindWake (Examples of Expenditure based records)

  • Expenditure based recordsExisting processes for accounting and project management were aligned to assist in identifying and costing eligible R&D activities.
  • Specific staff were responsible for coding expenses to eligible R&D activities.
  • File notes and timesheets were kept.
  • General ledger entries and invoices were apportioned and included sufficient detail to link to the R&D activities.

ColdTec (Examples of Activity based records)

  • Activity based recordsA register of all technical scoping and business planning documents – including the literature reviews they did to work out if the technology already existed.
  • An issues log documenting issues that arose during development and their solutions (both failed and successful) was kept.
  • Records of each stage of testing of the cloud solution were kept.

ColdTec (Examples of Expenditure based records)

  • Expenditure based recordsExisting processes for accounting and project management were aligned to assist in identifying and costing eligible R&D activities.
  • Specific staff were responsible for coding expenses to eligible R&D activities.
  • File notes and timesheets were kept.
  • General ledger entries and invoices were apportioned and included sufficient detail to link to the R&D activities.

Rutimech (Examples of Activity based records)

  • Activity based recordsProduction run sheets were kept as part of its normal business operations. Rutimech had run sheets for each production run. During their R&D project it simply added columns to these records to record changes and results.
  • Literature searches, laboratory notebooks and research reports were kept.
  • Reports for each stage of the testing in the cell and production environment were developed.

Rutimech (Examples of Expenditure based records)

  • Expenditure based recordsExisting processes for accounting and project management were aligned to assist in identifying and costing eligible R&D activities.
  • The contracts for the manufacture of the anode (the supporting activity) were kept.
  • File notes and timesheets were kept.
  • General ledger entries and invoices were apportioned and included specific detail to link to the R&D activities.
 

References