The Treasurer, Peter Costello, and the Minister for Industry, Science and Tourism, John Moore, today announced measures to streamline and improve the research and development tax concession.
"The changes emphasise the concession as a central element of the Commonwealth Governments strategy to encourage stronger private sector R&D," Mr Costello said.
Mr Moore introduced amendments to the Industry Research and Development ACT 1986 aimed at reducing compliance costs for companies.
"These changes will make the R&D tax concession more accessible to business," said Mr Moore. "They will reduce the compliance costs for companies and give them more time to make their claims."
The period for making an application for registration will be increased by four months, to a total of 10 months from the end of the year of income for which the company seeks registration. This will be more convenient for companies with normal accounting periods, giving them more time to prepare their applications and shifting the deadline away from busy periods.
The changes will allow the Industry Research and Development (IR&D) Board a limited discretion to consider some late applications for registration and to correct minor errors made by companies in their registration applications.
"The IR&D Board will also have increased flexibility to reduce registration information required from small and medium-sized companies," Mr Moore said.
Mr Moore said he would ask the IR&D Board to implement a range of joint activities with industry sectors and business organisations to promote the benefits of R&D and raise awareness of support available through the concession.
Mr Costello and Mr Moore said the Australian Taxation Office and the IR&D Board would improve monitoring of claims to ensure use of the concession was consistent with its intention to encourage industry to undertake genuine R&D. They said it was important to ensure the integrity of the concession was maintained against unintended tax benefits.
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The Government will also retain the current definition of research and development activities under the R&D tax concession. The decision follows recent widespread industry consultation during which industry favoured the current definition. Attached is an outline of amendments to streamline the concession.
Background Information Research and Development Tax Concession
Changes to streamline registration and lodgement requirements
- Provide a longer time to register for the concession, by extending the period within which applications must be lodged with the Board from six months to 10 months.
- Increase flexibility by providing the Industry Research and Development Board with discretionary power to accept late applications in exceptional circumstances, and where an honest error or mistake in completing an application form for registration.
- Reduce compliance costs by allowing the Board flexibility in the information required from companies registering for the concession. Companies making small claims will have reduced information requirements in their registrations.
Changes to ensure the integrity and efficacy of the concession
- Prevent loss of claims by allowing provisional certificates for approved overseas R&D activities to apply from the date when the Board receives a companys application. Currently, these provisional certificates apply from when the Board makes its decision.
- Ensure that information on registered Australian research agencies is current and up-to-date to assist those seeking their assistance, by making registration subject to annual renewal.
- Ensure that the benefit to Australia from the concession is maximised by clarifying the powers of the Board in circumstances where there has been no exploitation of successful R&D.
- Address an anomaly in the legislation so that the Board can issue a certificate to the Commissioner of Taxation stating that the certified expenditure in the provisional certificate for overseas R&D has exceeded the allowable 10 per cent of the total project expenditure.
- Increase the integrity of the concession by requiring companies claiming the concession to keep contemporaneous records supporting their claims.
Other measures will improve the operation of the Industry Research and Development Board, bring the Act up-to-date, and assist the Department better meet its responsibilities to the Minister and the Board.