ABC Filling R&D Tax Implementation

ABC Filling Case Study

Research and development is the forerunner to innovation in Australia and it comes in all shapes and sizes. ABC Filling is a brewing and bottling company, with clients from boutique breweries to national drink distributors.

At the heart of what they do is a R&D program working on new products for delivering beverages and liquid merchandise to the market. They are focused on new technologies, innovative and improved manufacturing processes that make them a market leader in Australia.

ABC Filling make use of the AusIndustry R&D Tax Incentive Scheme to help fund their innovation program.

We knew we had room for improvement, and AusIndustry made this very clear. We hadn’t realised how much we were missing in terms of not only making things better and more efficient with the paperwork but also that we were missing additional claims on some of our work

R&D Tax Incentive Compliance Concerns

ABC Filling approached SoftLogic Solutions initially after they were flagged for a routine audit by the ATO. Moreover, media reporting on the harsh penalties for non-compliance, particularly on record keeping had left them with concerns relating to:

  • Whether they had complete and compliant documentation of their R&D work to satisfy an audit with the Tax Office
  • The gap between the R&D team members having the right knowledge and understanding and what their accountant could take care of for them
  • A lack of R&D experience in the development team. While they are deep matter experts on bottling and production relating to this, taking a scientific test and learn approach as you would in a science lab was not built into their work program.
  • A number of different approaches had crept into the work program overtime, and they were not sure how to best realign and future proof their work program.

How we worked with ABC Filling

SoftLogic took a three-step approach to helping ABC Filling review and have confidence in their R&D implementation processes and the necessary documentation required to support the tax claim.

1 – Diagnostic Workshop

The first step was a team workshop which helped to identify the current approach and a better understanding for the team and what their responsibilities under the R&D tax scheme. This first step provided:

  • A documented approach on the current process and records information flow
  • An understanding of what the correct record keeping process should be, particularly as it relates to their business.
  • Education for the team and then working together to determine the best way forward that would be efficient, practical, and meet the necessary compliance requirements.
  • Identify areas where they could be claiming more, as the team came to better understand their IP and how it is defined under the R&D scheme.

2 – Gap Analysis Workshop

Following the first workshop, the team come together again to work through in detail their current processes. This helped them to:

  • Create a detailed gap analysis with a report, which identified the product strategy, project planning, eligibility criteria, experiment planning and reporting
  • Identify how to systemise the capture of these all-important documents into their everyday work program to make it practical and robust for continued compliance
  • Review current work to see whether it was compliant based on the new ‘approach’
  • Ensure any cost claims were tracked and supported as part of the agreed processes.

3 – Consistency Workshop

To embed the new processes and make sure they had continued consistency and adherence by all the team members ongoing, the following was developed as part of the final workshop.

  • A R&D Business Process Manual was developed with the R&D Team so that they had agreed and common working practices and an easy reference to keep them aligned going forward.
  • R&D Process Training across all areas of the business that need to adhere to the R&D processes eg. product development, finance.
  • A set of tailored R&D Templates to ensure the language and format was exact, each and every time a new document was created.
  • Identified tools and automation to make the process robust and practical, on an ongoing basis.

Outcomes

  • Far better prepared for when AusIndustry returns to do a detailed audit.
  • Identified additional claims as a result of the review, and better understanding of their work as it relates to new IP and the R&D Tax incentive scheme.
  • Comfort in the review process and the knowledge within the team to undertake the work in a way that would keep their funding claim compliant under the R&D Tax incentive.

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