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Ann: R&D Tax Incentive Refund, page-30

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johntdrums

55 Posts.

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08/06/17

18:22

Post #: 25181493
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Originally posted by JAL43 ↑

Look whatever.

If you don't believe me, that's fine. I am just providing factual information, everything I have posted is cut and paste from either the guidelines or the website. I sold my shares when they announced the R & D grant they received from the previous year because I have direct knowledge of how the system works as they have exposed themselves to a potential liability. I am not even sure the current Directors are aware as the first grant was received under the old management.

At the time there were a number of firms running around saying they can get this grant for companies for 20% of the amount received. I suspect that MRD agreed and took them at face value. Unfortunatley the ATO are now targeting those firms clients.

That is why Chartered Accountants firms like BDO are offering services to help companies that have been caught up in this scheme. It is a bit similar to what happened with the tax schemes related to tree plantations some years ago where advisors put clients into these schemes that were ultimately denied by the ATO because they didnt qualify and they had to pay back a lot of money.

So here are the facts:

Mineral exploration doesn't qualify as R & D (it is legislated that it is excluded from the R & D Tax Incentive scheme). The exact wording of the guidelines are:

"[N]one of the following activities are core R&D activities: b. prospecting, exploring or drilling for minerals or petroleum* for the purposes of one or more of the following:
i. discovering deposits;
ii. determining more precisely the location of deposits;
iii. determining the size or quality of deposits;"

MRD has claimed $1.9 million in R & D grants for the 2015 and 2016 FY.
This means that they submitted to the ATO they spent approximately $4.2 million on R & D over this period.

In the Annual Reports for those years the company has stated it spent a total of on exploration (payments for exploration activities) of drumroll......$4,149,095.
Yet in the Annual reports, there is no mention of R & D even though according to the size of the grant that is where all the money was spent.
However, the Annual Reports do say (and every quarterly) that MRD has been prospecting, exploring or drilling for the purpose of discovering deposits.

Since you are a Chartered Accountant why don't you crunch the numbers?

It seems pretty clear cut to me, MRD has a potential liability to the ATO of $1,913,522. I think that is significant enough to give people the heads up. It's only a potential liability because they have to be audited first to be found out.

Expand

Yes, but on the same page it states:

"Examples of activities unlikely to be excluded as core R&D activities: â€¢ Experimenting with new exploration techniques in areas where relevant geological, mineralogical or petrological characteristics are known â€¢ Experimenting with new geo-sensing techniques in areas where relevant geological, mineralogical or petrological characteristics are known â€¢ Non-routine testing of a sample that has been extracted as a result of drilling..."

Would that not entitle MRD to the grant...?

Last edited by johntdrums: 08/06/17

MRD Price at posting: 0.6¢ Sentiment: Hold Disclosure: Held
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