KPMG kindly hosted a Norwegian Australian Chamber of Commerce evening at their offices in Perth. The talks were excellent and certainly prompted a lot of discussions afterward.
The talks covered three main areas:
Cost saving ideas - five ways to cut taxes for yourself and your company. Caroline Hickson, Director, KPMG.
The Research and Development tax credit in Australia. What is it and is your organization eligible to make a claim? James Edwards, Partner, KPMG.
Tricks and traps of seconding staff to Australia – employment law basics. James Simpson, Partner, KPMG Law.
Caroline started the process looking at individuals, often working from home and how they could reduce personal income taxes. This included an interesting look at the ATO “My deductions” app and the process of keeping a 12 week travel log that can then be used as a basis for claims relating to business use of a personal vehicle for 5 years, providing of course that circumstances do not change.
The talk moved onto larger companies with some very interesting points about FBT and Data Analytics. For FBT there is now a draft ATO ruling about work related travel expenses providing greater clarity around situations where travel costs will attract FBT. Making sure that travel aligns with the ATO guidance could give companies significant savings over the years.
Data Analytics certainly seems to be a useful tool for larger companies judging by the examples. Some examples were Payroll Health Checks, including ensuring that salary sacrifice was carried out correctly and payroll tax calculated on the correct values, testing superannuation calculations for correct capping, and finally an investigation into FBT costs; where was money being spent and how does this compare to other organisations? Any anomalies could point to an opportunity to review company policies around expenditure on items such as entertainment.
James Edwards gave some very interesting insights into the funding of R&D and commercialisation, including the fact that there are two main areas of government support being the R&D Tax Incentive, an entitlement based benefit which can provide a reduction in tax payable or a cash rebate; and grant based programs which are traditionally competitive based with a need for matched funding.
For the R&D Tax Incentive, there was of course the question on what could be defined as eligible R&D activity, and the main tests broadly revolve around generation of new or improved products, processes, devices, services etc.; technical uncertainty and the presence of experimentation or testing.
There are many qualifying areas that companies need to be aware of, not least being who “owns” the R&D activity and hence the right to claim it under the R&D Tax Incentives – this ownership test considers three key issues being the right to exploit the intellectual property stemming from the R&D activities, the day to day control of the activities and bearing of the financial risk in undertaking the activities.
Another big question was what information had to be registered with the regulators to support the R&D Tax Incentive claim. Basically the registration document includes information relevant to each eligible R&D activity including areas of new knowledge being developed along with the associated technical uncertainty plus details of the experiments or tests that have or are anticipate to be performed. Additional substantiation documentation must be maintained by claiming companies to evidence their R&D activities.
Last but not least James Simpson covered seconding staff to Australia. It seems that even sophisticated companies can get it horribly wrong with multiple contracts that contradict each other in multiple different ways.
Contracts often quote policies and it is important to know how binding specific policies are. Generally it is recommended that they be advisory rather than contractually binding.
An interesting proposal was the personnel coming into Australia should undergo an induction on the laws that will be applicable to them while they are working here, this can cover things such as occupational health and safety which can vary dramatically from country to country.
Very briefly if you want to maximise a successful deployment of someone to Australia, consider the following points.
- Get a clear contract that applies to Australia.
- Consider the most appropriate jurisdiction for the contract; and
- Ensure the contract adequately addresses the relevant visa conditions.