The impact of JobKeeper and Cash Flow Boost payments on R&D Tax Incentive claims

Until recently there was some uncertainty regarding the potential impact of JobKeeper and Cash Flow Boost payments on R&D Tax Incentive claims.

The ATO has advised that the R&D Tax Offset is not affected by any Cash Flow Boost payments received. Therefore, there is no need to take these payments into account in your R&D claims.

However, the ATO has released a draft Determination (TD 2020/D1) that states that JobKeeper payments will trigger the ‘at-risk rule’ for the portion of the JobKeeper amounts associated with eligible R&D activities. That is, if an R&D employee is 100% involved in eligible R&D activities, then the entire JobKeeper amounts received for that employee will need to be excluded from R&D expenditure calculations. If an employee is only involved in eligible R&D activities for 50% of the time, then half of the JobKeeper amounts received for that employee will need to be excluded from the R&D expenditure calculation. The ‘at-risk rules’ also include an entitlement to receive, therefore June JobKeeper amounts received in July must also be taken into account in preparing the claim.

Comments are being accepted by the ATO on this draft Determination until 24 August 2020. It is our view that, despite the Determination not being final, the appropriate course of action is to exclude the JobKeeper amounts connected to eligible R&D activities.

Feel free to contact us, if you wish to discuss this further.