Tax Laws Amendment (Research and Development) Bill 2013 (CTH)

The Tax Laws Amendment (Research and Development) Bill 2013 has been introduced into the House of Representatives with the intended purpose of amending the Income Tax Assessment Act 1997. The bill will amend the act to deny access to research and development tax incentive for companies with aggregated assessable income of $20 billion or more for an income year.

The Research and Development tax incentive was originally introduced to replace the previous scheme on the 1 July 2011. The two major components of the scheme were a 45 per cent refundable tax offset for eligible entities with a turnover of less than $20 million, and a non-refundable 40 per cent tax offset for all other eligible entities.

The Government’s new measure introduced in this bill prevents an entity from claiming the Research and Development tax incentive if its assessable income for an income year, when aggregated with the assessable income of entities it is connected with, entities it is affiliated with and entities affiliated with it, is $20 billion or more.

These amendments limit the R&D tax incentive to entities with aggregated assessable income of less than $20 billion in an income year. An entity with aggregated assessable income in excess of $20 billion treats its R&D expenditure in the same way as it treats its other expenditure, for example, as a deduction. This denies access to the R&D tax incentive for very large entities, which are less likely to engage in additional R&D in response to Government incentives.

This measure was previously introduced into Parliament in Schedule 1 to the Tax Laws Amendment (2013 Measures No. 4) Bill 2013. That Bill lapsed when Parliament was prorogued before the 2013 federal election.

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