6 October 2017

R&D fraudsters in the government’s sights

The recent successful prosecution against Melbourne tax agent Arjuna Samarakoon for defrauding the Australian Government highlights the Turnbull Government’s commitment to ensuring the Research and Development (R&D) tax incentive supports only honest taxpayers.

Mr Samarkoon was charged with money laundering offences after transferring $380,000 from company accounts to his own personal account, and has been sentenced to 29 months’ imprisonment.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said criminals who seek to defraud the Commonwealth through fraudulent R&D tax incentive claims are being put on notice by the Serious Financial Crime Taskforce (SFCT), who are now taking priority action to stamp out this behaviour.

Businesses undertaking legitimate R&D activities may be eligible to claim a tax offset under the R&D tax incentive. However, these claims must be for legitimate research and development. The scheme is administered by the Australian Taxation Office (ATO) and the Department of Industry, Innovation and Science (DIIS), and requires applicants to self-assess their eligibility.

The SFCT is actively pursuing taxpayers who make claims which they are not entitled to, preventing the loss of millions of taxpayer dollars.

Currently, there are approximately 15,000 AusIndustry registrants for the R&D incentive and a further 13,000 have already claimed through the ATO. In 2016-17 total R&D tax offsets was $6.1 billion, of which $3.6 billion were refundable offsets. While most of these claims are legitimate, the Government takes all matters of fraud seriously.

“Unfortunately, there are those who believe they can game the system for their own advantage. Our message to those people is you will be caught, and you will face the consequences,” Minister O’Dwyer said.

With increased focus from the SFCT, R&D tax offset claims will be scrutinised for blatant abuse.

“Under the SFCT agencies can make better use of their resources, data-matching capabilities and intelligence-sharing relationships to uncover the most intricately planned tax fraud schemes,” Minister O’Dwyer said.

More information about the program, eligibility criteria, and how to access the incentive is available at business.gov.au and ato.gov.au.