Treasurer Wayne Swan and Innovation Minister Kim Carr today released a second exposure draft of the legislation for the new R&D tax incentive.
"The new R&D tax incentive will be critical to thousands of Australian businesses, which is why we're consulting so thoroughly to deliver the best possible scheme," the Treasurer said.
"In light of the feedback received on the exposure draft legislation released in December 2009, the Government has adopted a range of changes to make the legislation clearer and align more closely with the stated intent of the policy," Senator Carr said.
The modifications to the legislation include a revised definition of core R&D that uses clearer language and dispenses with a range of overlapping tests. The Government has also decided not to extend the exclusions list to supporting activities and to narrow the scope of activities to which the new dominant purpose test will apply.
"After close consideration of the new tests for core and supporting R&D and detailed consultations, we have concluded that the augmented feedstock rules should not be necessary," Senator Carr said.
The second exposure draft also takes a new approach to software R&D. Generally, software R&D will be subject to the same rules as all other kinds of R&D, but will be subject to a more targeted exclusion for certain in-house software.
"The new R&D tax incentive will provide higher rates of assistance for a more targeted range of activities," the Treasurer said.
"By encouraging investment in R&D, rather than 'business as usual' activities, the new R&D tax incentive will deliver a better return for taxpayers in the form of improved productivity across the Australian economy," the Treasurer said.
"The new R&D tax incentive will enable more small innovative firms to get an immediate contribution towards their R&D, even if they are not yet turning a profit. This will provide innovative start-ups with the certainty they need to invest in growing their business," Senator Carr said.
The Government still expects the new R&D tax incentive to start from 1 July 2010. Legislation for the new scheme will be introduced in the next sittings of Parliament.
The Government encourages all interested parties to take a fresh look at the legislation for the new scheme and to make any further submission, however brief, by Monday, 19 April 2010. The exposure draft legislation and explanatory materials can be found on the Treasury website www.treasury.gov.au.
31 March 2010