Hi, I am completing my R&D form, and it asks if "Is the R&D entity that is registering the head company of a consolidated or multiple entry consolidated (MEC) group?" - During the year we created a wholley owned 'sub' company for trading, and some R&D expenses were spent through that entity. Is it simple just to assign those expenses to the head company or do we need to merge for tax purposes?
for the R&D entity to claim the sub R&D expenses, you would have to consolidate for tax. This is a highly technical area, and I strongly advise you track yourself down a good R&D consultant and accountant with experience in tax consolidation and R&D claims.
ok so only one company at a time can claim the R & D grant generally unless your nominate for the MEC. There are provisions about the size of the group I think $20m in total aswell. This dictates the percentage you will get back and or claim.
If you are in a loss you can get actual cash back.
Getting back to your issues check this out.
If you are the head company of a consolidated group or MEC group, your subsidiary members are treated as part of you (the head company) while they are part of the consolidated or MEC group for income tax purposes. Therefore, the R&D tax incentive applies to your consolidated group or MEC group as if it is a single entity.
Like Brendan said this is a complicated area and under scrutiny at the moment from the ATO. We have a department that deals with R & D claims so get in contact if you want help with this.