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Research & development reform

New R&D tax offset from 1 July 2011

This table provides a reverse chronology of the events that have occurred since the Government's 2009-10 Budget announcement that a new R&D tax incentive will replace the R&D tax concession.

Click on the links to view detailed commentary or analysis about each stage of this process.

15 August 2012
ATO released Draft Taxation Ruling on Feedstock issues

The ATO issued a draft Taxation Ruling that considers certain aspects of the feedstock adjustment provisions in Subdivision 355-H of the Income Tax Assessment Act 1997 with submissions due by 28 September 2012.

   
3 August 2012
Consultation document on quarterly credits released

The Government released a Consultation Document for interested parties to provide feedback by 31 August 2012 on the proposed arrangements for the refundable R&D tax offset to be credited to eligible taxpayers quarterly from 1 January 2014.

   
19 June 2012
AusIndustry forms released

AusIndustry released the R&D registration form that should now be used to lodge R&D applications for income years commencing on or after 1 July 2011.

   
31 May 2012
ATO forms released

The ATO released the 2012 forms and schedules reflecting the new R&D schedule for the new R&D tax incentive. Early balancers claiming the R&D concession will need to lodge manually using amended 2011 forms.

   
30 March 2012
AusIndustry releases registration guidance

AusIndustry released public guidance on the registration requirements that companies will need to comply with to be able to claim the R&D tax incentive. The registration form itself will be released in June 2012.

   

9 December 2011
AusIndustry open for applications for Advance or Overseas findings

 

On 9 December 2011, AusIndustry issued an alert notifying taxpayers that applications for Advance or Overseas findings under Division 3 of the Industry Research Development Act 1986 can now be made.

Under these provisions, a taxpayer can seek an advance finding about whether:

  • An activity is an R&D activity
  • Whether an activity cannot be conducted in Australia for the purposes of claiming expenditure on overseas activities
  • Whether particular technology is core technology.

More information on what information needs to be included in an application for an advance finding is also set out in the Industry Research and Development Regulations 2011 (see 26 November 2011 section below).

The form and application notes to make an application for an advance finding are available at the AusIndustry website.

   
1 December 2011
Commencement of Industry Research and Development Decision-making Principles 2011

In quick succession to the registration of the IRD regulations, the Industry Research and Development Decision-making Principles 2011 were also registered on the Federal Register of Legislative Instruments on 1 December 2011.

The Instrument was issued in draft earlier in 2011 and now sets out the Principles which the Innovation Australia Board must comply with when considering the following issues under the R&D tax incentive:

  • An extension of a deadline
  • Whether to make findings about R&D activities and core technology
  • Variations to registrations.

The Principles commenced on 2 December 2011. The Principles and the Explanatory Statement can be found online at the Australian Government ComLaw website.

   
26 November 2011
Commencement of the Industry Research and Development Regulations 2011

The final Industry Research and Development Regulations 2011 were made under the Industry Research Development Act 1986.  They were signed on 23 November 2011, registered on the Federal Register of Legislative Instruments on 25 November 2011 and commenced on 26 November 2011.

The final regulations:

  • Set out the matters to be included in certificates for findings
  • List entities which may apply for advance findings on behalf of eligible R&D entities
  • Set out the conditions and criteria for Research Service Providers (entities which are registered as being capable of providing R&D services and expertise in particular research fields)
  • Set out the minimum information to be included in registration forms and applications for advance findings
  • Specify various 'research fields'.

Also see the Explanatory Statement to the draft regulations issued earlier in 2011.  

It is worthy of note that there remain regulation-making powers for which specific regulations have not yet been registered (including the payment of fees in certain circumstances and potential additional conditions to be satisfied when there are overseas R&D activities).  

These may be registered over time if issues arise in practice.

   
8 September 2011
Bill received Royal Assent
  • The Bill received Royal Assent on 8 September 2011 so the new provisions now have the force of law and will apply to income years commencing on or after 1 July 2011.
24 August 2011
Bill passes Parliament
  • The House of Representatives passed the Bill that the Senate had amended and passed on 23 August 2011, provisions which will have the force of law from the receipt of Royal Assent.

    As announced, the new provisions will have retrospective effect from 1 July 2011.

    The latest Compass edition discusses the technical essence of the rules as they will take effect, referring to significant changes that occurred during consultation, and identifying changes from the R&D concession that will continue to apply to claims for income years before the new provisions take effect.
15 June 2011
R&D Bill update
  • The Government announced that the start date of the new R&D tax offset would be revised to income years commencing on or after 1 July 2011.
22 October 2010
R&D Bill update
  • The Bill for the new R&D tax offset was reintroduced into Parliament during the first sitting week after the election result was decided. As it was a short sitting week, debate was delayed until Parliament reconvened on 18 October 2010. It was expected that debate would commence during that sitting week (18 – 21 October), but this was delayed until the sitting week starting on 25 October. The wait continues to see what amendments, if any, will be taken up and, importantly, the proposed starting date for the new scheme.
28 September 2010
New Parliament sits
  • The 43rd Australian Parliament sits for the first time, from Tuesday 28 to Thursday 30 September 2010
  • The Tax Laws Amendment (Research and Development) Bill 2010 is expected to be reintroduced into the House of Representatives during this three day period.
19 July 2010
R&D Bill update
  • The Government went into caretaker mode after calling the election to be held on 21 August 2010
  • As a result, the Taxation Laws Amendment (Research and Development) Bill 2010 and the Income Tax Rates Amendment (Research and Development) Bill 2010 (the R&D Bills) have lapsed
29 June 2010
R&D Bill update
  • The Tax Laws Amendment (Research and Development) Bill 2010 was due to be debated in the Senate last week but did not progress beyond its first reading because of other Senate priorities. Thursday was the Senate's last sitting day before the winter recess, and with a Federal election looming, the Bill will probably not be read again and debated before the election. For the time being, it's business as usual under the current R&D incentive regime.

    Companies should continue to keep records of their R&D activities and expenditure, and prepare/update R&D plans in accordance with the current legislation. Please note that the 175% concession for incremental R&D remains, as does the $2 million threshold for R&D expenditure for those companies that can claim the R&D tax offset.

    What happens next depends on when the election is called. Once an election is called, the Government goes into caretaker mode, and all draft legislation is set aside, so the Bill will become redundant.

    The new Prime Minister has ruled out a 2011 election, so the election must be held later this year, and there is unlikely to be another Parliamentary sitting before the election, so the Bill will probably be set aside.

    If the Government is re-elected, it may seek to reintroduce the Bill. It is anticipated, though, that changes would need to be made, including to the effective start date. The debate would then start again.

    Alternatively, if the Opposition is elected, we understand that the Bill will not be re-introduced.

    The next few months will determine what is in store for R&D in Australia. Deloitte has been actively involved in discussions with the relevant stakeholders, and will continue discussions if the need arises.
15 June 2010
Senate Economics Legislation Committee Report released
  • The Senate Economics Legislation Committee have released their report on the proposed R&D Bill
  • The report recommends that with some amendments that the Bill will be passed
  • The opposition in their dissenting report have confirmed that they will oppose the bill
  • Click to view the Senate Committee's report.
28 May 2010
Deloitte submission to Senate inquiry
  • Deloitte has lodged a written submission to the Senate Economics Legislation Committee's inquiry into the R&D Bill. This follows the oral submission made by Deloitte (by Serg Duchini) at the public hearing conducted by the Committee in Sydney on 21 May 2010
  • Click to view Deloitte's written submission

13 May 2010
R&D Bill introduced

into Parliament

  • The Tax Laws Amendment (Research and Development) Bill 2010 was introduced into the House of Representatives. Debate on the Bill was adjourned until 24 May 2010.

    We have analysed the Bill and the Explanatory Memorandum. Although there have been some changes, our conclusion is that the essence of the second exposure draft has been retained. It is disappointing that concerns consistently expressed by stakeholders have not been addressed. Our May 2010 edition of Compass: Navigating R&D focuses on the changes from the second exposure draft – click to view the May 2010 edition.

    The Bill has been referred to the Senate Economics Committee for inquiry. The Committee is required to complete its report by 15 June 2010. Due to this tight timeframe, the Committee will conduct hearings on Thursday 20 May 2010 (Canberra) and Friday 21 May 2010 (Sydney).

    This inquiry provides an important opportunity for all stakeholders to comment on the practical and commercial implications of the Bill for their investment in R&D. Submissions about the Bill can be made to the Economics Committee in writing – view the inquiry site for details.
    The hearings on 20 and 21 May will offer an opportunity for stakeholders to make submissions to the Committee in person. We understand that invitations will be issued by the Committee over the coming days, but that they will be limited in number. It is therefore important that interest in making a submission is flagged as soon as possible.

    Deloitte will be making a written submission to the Committee and has expressed strong interest in presenting our views at the inquiry hearings.

    Please contact your Deloitte R&D adviser if you want to discuss any of the above in more detail.

  • View the R&D Bill (as introduced into the House of Representatives) and the Explanatory Memorandum
31 March 2010
Second exposure draft bill released for public comment

25 February 2010
Treasury announcement on submissions received on first exposure draft bill and the way forward

18 December 2009
First exposure draft bill released for public comment

18 September 2009
Release of 'The New Research and Development Tax Incentive' consultation paper

12 May 2009
Federal Budget announcement about new R&D tax offset from 1 July 2010

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