A Queensland company that secured millions in tax refunds for clients by exploiting the R&D tax incentive program has been ordered by the Federal Court to pay a $4.25 million fine to the Commissioner of Taxation.
The Commissioner commenced action last year against Australian R&D Funds and Grants Services Pty Ltd, now known as International Indigenous Football Foundation Australia Pty Ltd (in liquidation), and its director, Lorraine Amede, in relation to their conduct involving encouraging clients to lodge overstated or ineligible claims for refundable Research & Development (R&D) tax offsets.
The Commissioner’s case focused on 10 schemes promoted by the company and Amede, which resulted in eight clients receiving, in total, more than $3 million in tax refunds to which they were not entitled.
The Court found that both the company and Amede had breached the promoter penalty laws in relation to 10 separate schemes. Amede has also provided undertakings to the Commissioner in relation to future conduct.
According to the ATO, the decision confirms that the laws apply to arrangements which are tailored and marketed to individual clients, as well as to mass-marketed tax schemes.
Participation in the R&D tax incentive program has grown since its inception in 2011. The number of companies which claimed the R&D tax offset increased from 6,475 to 13,074 between the 2013 and 2017 financial years. In the 2017 financial year, the ATO received claims for R&D tax offset of more than $6.1 billion.
Assistant Commissioner Michael Hardy said the ATO is committed to protecting the integrity of the R&D Tax Incentive Program, which is designed to encourage Australian businesses to invest in new research and development.
“We want to protect individuals and businesses from being unwittingly caught up in schemes like this one,” he said,
“Those who encourage others to do the wrong thing and claim the incentive to which they are not entitled will be caught and held to account for their actions.”
“If you think you have been approached by a scheme promoter or are inadvertently involved in a tax avoidance scheme you should contact us right away. If you approach us early, you may be eligible for a reduction in any penalties imposed.”
For more information on how to recognise a dodgy scheme go to ato.gov.au/General/Tax-planning/Recognise-a-dodgy-scheme/
To report a possible scheme email firstname.lastname@example.org or call us anonymously on 1800 060 062.