Green’s resurrect quarterly credits system

August 27th, 2014

christine milne R&D tax incentive creditsThis morning, in a bold move to resurrect the quarterly credits concept, the Leader of the Greens, Christine Milne moved amendments in the Senate to the Tax Laws Amendment (Research and Development) Bill 2013.  As part of this move, the Greens will also aim to strike out Government plans to cut R&D incentives for large companies.

It is important to note that the original Tax Laws Amendment (2013 Measures No. 4) Bill 2013 established a scheme for making refundable tax offsets available in quarterly installments. That Bill did not pass both houses prior to parliament dissolving on August 5 2013 and was subsequently abandoned by the Abbott government on 14 December 2014.

Today, Greens Research spokesperson, Adam Bandt MP said “Tony Abbott is an economic wrecking ball and these cuts to research and development incentives prove it. Research and development is vital to our prosperity regardless of the size of company. We should be boosting funding not cutting it.”

As part of the new amendments, it is proposed that a taxpayer must pass three tests before it is eligible to participate in the quarterly credits system.

Test 1:  Reasonable receipt test

It is reasonable to expect that:

  • the taxpayer will become entitled to the tax offset for the income year; and
  • the tax offset will be subject to the refundable tax offset rules.

Test 2: Complying taxpayer test

Put simply, the taxpayer will pass this test if:

  • no part of the taxpayer’s tax-related liabilities remains unpaid after its due date;
  • during the last 5 years, the taxpayer has not been convicted of an offence against any tax laws;
  • the taxpayer is currently complying with all tax laws; and
  • it is reasonable to expect that in the future the taxpayer will comply with all tax laws.

Test 3: Extra Tests

One of the listed extra tests is that the taxpayer must have been entitled to a tax offset for at least one of the last 5 income years.

Other minor changes

Amendments are proposed to:

  • the Commissioner’s requirement for a taxpayer’s participation or refusal of participation in the quarterly credits system; and
  • the application date for a taxpayer’s participation in the quarterly credits system.

The move is expected to be popular with the ALP and PUP Senators, but unlikely to pass the lower house.

Click here for a list of the Green’s amendments and substitutions.