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R&D tax incentive legislation :Exception for large businesses

November 15th, 2013

A new R&D tax incentive legislation of the Income Tax Assessment Act 1997,  section s355-103, will provide an exception for large business in claiming R&D tax incentive benefits. The new section will be back dated to 1 July 2013, and as of late yesterday afternoon been moved to a second reading in the lower house.  

The Tax Laws Amendment (Research and Development) Bill 2013 contains the following parts:

355-103   Exception for large businesses

1)      Despite section 355-100, an * R&D entity is not entitled under that section to a * tax offset for an income year if its amount worked out under subsection (2) for the income year is $20 billion or more.

R&D entity’s aggregated assessable income

2)      The * R&D entity’s amount for the income year is the sum of:

a)   its assessable income for the income year; and
b)   the assessable income for the income year of any entity that is * connected with the R&D entity at a time during the income year; &
c)    the assessable income for the income year of any entity that is an * affiliate of the R&D entity at any time during the income year; &
d)   the assessable income for the income year of any entity of which the R&D entity is an affiliate at any time during the income year.

Amongst other things, the above amendment is due to receive royal accent by June 2014.  The Big 4 Banks, BHP Billton, Rio Tinto, Westfarmers, Woolworths and Telstra are expected to loose the tax breaks.