Using contractors

Time spent by contractors on eligible activities is often a large part of a R&D project expenditure. It is declared separately on the R&D schedule, and if the contractor is an RSP, then there is a third declaration. In all cases the basis of the assessment is the same, the activity being conducted must be eligible.

Contractors may be independent third parties, or they may be connected to the R&D entity (such as founders or Directors providing their services).

For third party agencies or service providers, consider whether the R&D may be considered to have been outsourced, and no longer eligible.

If contractors will be working on site and using company resources, then they will incur overhead costs, and their usage of those resources should be included on information provided to us.

If you are using contractors because of their specialist knowledge and expertise to solve the problem, then consider whether this implies that the outcomes are not unknown under this arrangement.

If using a contract agency, especially a software development agency, then it is your responsibility to ensure that the work to be done is being carried out in Australia, even if the agency is resident in Australia and being paid in local currency. The overseas activities test is based on the location of the activities, not on the method or currency of payment.

This is not the case for provision of materials or information. For example if a market research report is purchased from an overseas provider then it could be eligible expenditure (assuming the research is directly related to an eligible core activity), however, if the research were specifically commissioned as a supporting activity, then it would not be eligible.