The Federal Government has announced crossbench support for the new R&D Tax Credit with a new start date of 1 July 2011. The new $1.8 billion R&D Tax Credit will replace the R&D Tax Concession.

 

The R&D Tax Credit was announced in the May 2009 Budget as part of the Government’s Innovation Agenda, Powering Ideas – An Innovative Agenda for the 21st Century. It will apply to activities and expenditure in income years commencing on or after 1 July 2011. The R&D Tax Concession applies to activities and expenditure in income years prior to 1 July 2011.

 

The R&D Tax Credit has two core components:

  • a 45 per cent refundable tax offset (equivalent to a 150 per cent concession) for eligible entities with a turnover of less than $20 million per annum
  • a non-refundable 40 per cent tax offset (equivalent to 133 per cent deduction) for all other eligible entities. 

 

The R&D Tax Credit will apply to activities and expenditure in income years commencing on or after 1 July 2011. The R&D Tax Concession applies to activities and expenditure in income years prior to 1 July 2011.

 

Following discussions with the Greens, the Government will introduce quarterly payments for small and medium businesses from 1 January 2014. These firms will get their credit sooner, significantly improving their cash flow and incentive to invest in R&D.

 

The deferral of the start date to 1 July 2011 has an overall impact of $40 million, with a negative impact of $310 million in 2011-12 and a positive impact in 2012-13 of $270 million.

 

Legislation for the R&D Tax Credit is contained in two Bills:
Tax Laws Amendment (Research and Development) Bill 2010
Income Tax Rates Amendment (Research and Development) Bill 2010

 

More information is here