This afternoon, the Senate Economics Legislation Committee (“the Committee”) tabled their report into the Tax Laws Amendment (Research and Development) Bill 2013 (“the Bill”).
As it stands, the Bill proposes that companies with an aggregated assessable income of $20 billion or more are to be denied access the R&D Tax Incentives.
The Bill is expected to save approximately $1 billion annually and apply to income years commencing on or after 1 July 2013.
The Committee recommended that the Bill be passed due the following reasons:
Although the Committee supported the Bill, it recommended further consideration to the definition of ‘aggregated assessable income’ particularly in respect of life insurance companies and petroleum retailers. Interestingly, the Committee did not recommend a revision of the definition of ‘aggregated assessable income’ to consider a foreign company’s worldwide income, an issue widely challenged during the consultation process.
The Committee considered that the Bill would allow funding to be targeted towards companies which are more responsive to the tax offset and who are more likely to increase their R&D spending as a result of the incentive, which represents a better use of taxpayer money.
Labor did not support the Committee’s recommendations and will likely vote against the Bill due to:
Even without the support of Labor, the Bill is expected to pass before June 30 this year.
Athough there is certain to be disappointment amongst stakeholders, it is expected that the upcoming review of the R&D tax incentive will provide a new opportunity for consultation on other issues relating to R&D tax incentive such as specific incentives for SMEs and further exploration of the ‘patent box’ concept.
To download the report, please click here.