Status: On 12 May 2009 the Government announced it will replace the existing R&D Tax Concession with a new R&D Tax Credit. Legislation for the R&D Tax Credit was introduced into Parliament in May 2010 with the intention that the program would start from 1 July 2010. The new R&D tax incentive is contained in the Tax Laws Amendment (Research and Development) Bill 2010 and the Income Tax Rates Amendment (Research and Development) Bill 2010, available on the Parliament of Australia web site.
Parliament adjourned before the Tax Laws Amendment (Research and Development) Bill 2010 could be brought to a vote in the Senate.
Parliament has been prorogued and from 5pm on Monday, 19 July 2010, government is subject to caretaker conventions, limiting its function to routine administration during the election period.
Description: The new R&D Tax Credit is to be a broad-based and market driven incentive package. The two core components of the package are:
- a 45 per cent refundable tax credit (the equivalent to a 150 per cent concession) for eligible entities with an aggregated turnover of less than $20 million per annum;
- a non-refundable 40 per cent R&D tax credit (the equivalent of a 133 per cent deduction) for all other eligible entities.
To accompany this change of rates and delivery mechanism is to be a clearer and better targeted definition of eligible ‘R&D activities’ that will ensure the incentive is available in circumstances consistent with the underlying rationale for government intervention and that it delivers value for money for taxpayers.
An interim measure, prior to the introduction of the R&D Tax Credit, increased the R&D expenditure cap for the R&D Tax Concession Offset from $1 million to $2 million for income years starting on or after 1 July 2009. This demonstrates increased Government support for eligible small companies.
Information on the Government’s announcement of the R&D Tax Credit is available at the Minister for Innovation, Industry, Science & Research’s website www.minister.innovation.gov.au.
Information on the Government’s Innovation Agenda, Powering Ideas – An Innovative Agenda for the 21st Century, is available at the Department’s website www.innovation.gov.au.