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Tax Telegraph, June 2013

LegislationSustaining the superannuation contribution concession

On 1 May 2013, Treasury released ED legislation and explanatory memorandum to reduce the tax concession that individuals with income above $300,000 receive on their concessional superannuation contributions from 30% to 15% by imposing the tax under Division 293 of the ITAA 1997. The amendments will apply to contributions made or received by very high income earners on or after 1 July 2012.

Submissions on the ED were due 8 May 2013.

Removal of access to R&D measures for large businesses

The Assistant Treasurer has released exposure draft (ED) legislation and explanatory materials in respect of the announcement in the Government’s February 2013 Industry and Innovation Statement to place a turnover threshold on those entities able to access the 40% non-refundable research and development (R&D) tax incentive.

Companies, and company groups, with income of $20 billion or more would no longer be eligible to make claims for R&D incentives under this measure. The new R&D tax incentive took effect from 1 July 2011 and the ED legislation proposes to remove access to an additional 10% net tax benefit available in respect of eligible R&D expenditure. The intention is to focus resources on smaller corporate groups where it is believed that behavioural change is more actively stimulated by R&D tax incentives and thus will deliver the greatest return on taxpayer funding.

Notably, the relevant threshold of this new third-tier test would be based on assessable income of the entity and its connected and affiliated entities (rather than the worldwide annual turnover test currently applied to determine access to the refundable R&D tax offset). The Government has previously estimated that this tier threshold will capture only 15 to 20 corporate groups, or less than 1% of claimants. Potentially, this includes a number of the big banks, the large miners and major players in the consumer business, telecommunications and retail sectors.

The proposed legislation would have effect from 1 July 2013.

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