Research & Development Bill

From our November 2010 issue

 

The new research and development (R&D) bill was re-introduced into a newly formed House of Representatives this month. This Bill remains largely unchanged from its previous version, though minor clarifications have been made to ensure that ‘development’ activities will still be eligible for the R&D concession.

The passage of this Bill through Parliament is not expected to be smooth due to the nature of the minority Government, and if the passage of the Bill is delayed until the new Senate is formed in July 2011, the passage of the Bill through the upper house could be delayed further.

However, taxpayers should take note of the changes contained in the Bill, as it is due to take effect from 1 July 2010 and is therefore intended to affect the tax position of all entities engaged in research and development activities in the current income year.

The new Bill amends:

 which companies will be eligible for research and development concessions

 the nature of the concession (which is being changed from a credit to a tax offset)

 the amount of the concession (businesses with a turnover of less than $20 million will have access to an increased tax offset)

 the list of exclusions (i.e. activities that generally cannot be R&D activities for the purposes of the concession)

 the R&D concessions available for costs of software development activities.

As these changes are due to take effect on 1 July 2010, the eligibility for R&D concessions, as well as the amount and type of the concession (i.e. refundable or non-refundable offset rather than a credit) will likely be different for your 2011 income tax return as compared to your 2010 income tax return.

As such, if you have in the past claimed the R&D tax credit, or suspect you may be eligible to do so in the future, you should consult with your tax advisor to identify the challenges and opportunities for you arising from the new Bill.

TO DO
Taxpayers that currently claim research and development concessions, or suspect they may be eligible to do so in the future, should consult with their tax advisor to clarify their tax position under the new Research and Development Bill.

 

 

 

 

 

This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.