Is your R&D Tax Incentive claim at risk? You had better hope so, according to the ATO’s recently released Draft Taxation Ruling

The Australian Taxation Office recently released a draft Taxation Ruling (TR 2021/D3) that clarified the Commissioner’s stance on the ‘at risk’ rule that affects the Research and Development Tax Incentive. The ‘at risk’ rule affects R&D Tax Incentive claims by reducing or denying claims where expenditure does not meet the requirements of this rule. Essentially, companies may only receive the R&D Tax Incentive on eligible expenditure where they bear the financial risk in undertaking their R&D activities.

To illustrate this principle the draft ruling uses a series of examples to outline how the rule might be applied and what its implications may be.

This is the 2nd piece of guidance material about the ‘at risk’ rule that the ATO has released in the past 12 months (the 1st related to JobKeeper payments).

More information and the full draft ruling (TR 2021/D3) is available to read here: Draft Ruling – R&D tax incentive at risk rule | Australian Taxation Office (

If you feel that this draft ruling may affect your R&D Tax Incentive claim, feel free to get in contact.

By Michaela Burchell, Advisor at Catalyst Solutions Australia