You can claim overseas R&D activities as part of an Australian project. To do this, you must apply for and receive a finding that the overseas R&D activities are eligible, and then register those activities.
The Four Conditions for an Overseas Finding
To register and claim a tax offset for activities conducted overseas, you must first apply for an Overseas Finding. To receive one, you must demonstrate all four of the following conditions are met.
1. The overseas activity must be an R&D activity
The overseas activity must meet the R&D Tax Incentive program's requirements for being either a core R&D activity or a supporting R&D activity.
2. There must be a scientific link to an Australian core R&D activity
You need to show that there is a link between your planned overseas activity and your eligible Australian core R&D activity, and that you can't complete the Australian core R&D activity without conducting the overseas activity.
3. The activity cannot be conducted in Australia
You must demonstrate why the activity can't be solely conducted in Australia. There are four allowable reasons — the activity requires:
- Facilities, expertise or equipment not available in Australia
- Actions that would contravene Australian quarantine law
- A population of living things not available in Australia
- Access to geographical or geological features not available in Australia
Financial reasons alone are insufficient for an overseas activity to meet this condition.
4. Overseas costs must be less than related Australian R&D costs
If the anticipated expenditure for your overseas R&D activities is greater than the anticipated expenditure on the related Australian R&D activities, they will not be found eligible. You must include what you reasonably anticipate the expenditure will be in all income years when you apply.
How Long Overseas Findings Last
An Advance Finding binds the Commissioner of Taxation for up to 3 income years from the start of the income year in which your application was made. An Overseas Finding applies for the duration of the activity — meaning if you already hold an Overseas Finding for particular ongoing activities, you need not reapply after 3 income years.
Important: A Finding is Not a Registration
Even if you have a positive Overseas Finding, you still need to apply to register your R&D activities. An Overseas Finding is not a substitute for registration and does not automatically entitle you to the R&D Tax Incentive.
Source: business.gov.au — Claiming overseas R&D activities
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