From Excessive Tax Payments to Substantial Refunds: How We Maximised our Client’s Tax Refund

For many businesses, tax can become an overwhelming burden. Choosing an accountant may seem straightforward, yet picking the wrong one can lead to significant financial loss. BridgePoint Group recently encountered this situation with a Fintech client in software development. The client specialises in banking platforms for financial institutions in developing nations, and operates internationally, earning revenue across multiple countries. After finishing their financial year, this client mentioned they felt burdened by their recent tax payments. They sought our guidance, suspecting that their accountant’s oversight had resulted in unnecessary tax costs.

Our Challenge

Our task at BridgePoint Group was to identify potential reasons for this Fintech company’s excessive tax burden and secure a substantial tax refund if warranted. This involved conducting a thorough review of the client’s financial records and tax return for the previous year. Since the company primarily serves overseas clients, we needed to confirm if their previous accountant had correctly applied tax credits, particularly under Double Tax Agreements (DTA) that Australia has with other nations. Additionally, we looked to uncover any missed eligibility for other tax incentives, especially the Research and Development (R&D) Tax Incentive, which could further lower their tax liability.

What We Did

To address the client’s high tax payments, we conducted a comprehensive review of their financial statements and tax returns. Here’s what we discovered:

• Double Tax Agreement Credits: Upon investigation, we found that the client’s previous accountant failed to claim tax credits for foreign income tax paid on overseas earnings. Australia has Double Tax Agreements with many countries, allowing Australian businesses to avoid double taxation on income earned internationally. However, the previous accountant’s oversight meant the client missed out on significant tax credits, costing them over $200,000 in excessive tax payments.
  
• R&D Tax Incentive Eligibility: In our conversations, the client also revealed that their software development activities qualified as Research and Development (R&D), which made them eligible for the R&D Tax Incentive. This incentive is specifically designed to support innovative Australian businesses by providing refundable tax offsets on R&D expenditure. Because it was still March, the client had until 30th April to submit an application to Austrade, meaning we had time to help them claim this additional tax benefit.
  
• Amended Tax Return: With this new information, we prepared an amended tax return to include the missed DTA credits and incorporated the R&D Tax Incentive. This step required detailed calculations of eligible R&D expenses to maximise their refund, ensuring all relevant tax credits and offsets were claimed.

Tax Refund Outcome

The results were immediate and impactful. By correcting the oversight of the Double Tax Agreement credits, we recovered over $200,000 that the client had unnecessarily paid. Moreover, thanks to the R&D Tax Incentive claim, the client received an additional refund, bringing their total tax refund to approximately $400,000.

In total, BridgePoint Group helped the client transform a taxing burden into a substantial financial gain, demonstrating the value of choosing an accountant who understands complex tax obligations, international credits, and eligibility for government incentives. In this case, our proactive review of their financial and tax details converted a challenging financial situation into a streamlined tax refund process, highlighting the critical role the right accountant can play in a business’s financial success.

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Mitchell Turnbull

DIRECTOR

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