The Federal Government has released draft legislation for the new R&D Tax Credit, which it claims is “the biggest reform to business innovation policy in over a decade.”
The draft legislation aims to deliver a “more generous, more predictable, and less complex tax incentive” replacing previous R&D Tax Concessions.
It will cut red tape and provide better incentives to help boost the competitiveness of the Australian economy.
The R&D Tax Credit is a central element of the Rudd Government’s long-term agenda to lift Australia’s innovation capacity and performance, Powering Ideas.
It is designed to boost investment in research and development, support jobs and strengthen Australian companies as they continue to seize new opportunities during the economic recovery.
Under the new R&D Tax Credit, companies can invest with certainty knowing they can claim a tax offset of at least 40 per cent of their expenditure on R&D activities, rising to 45 per cent for companies with a turnover of less than $20 million.
The R&D Tax Credit will allow small innovative firms to get an immediate contribution towards their R&D spend even if they are not yet turning a profit.
For example, a company in tax loss turning over $10 million and spending $1 million on eligible R&D activities will now receive a refund of $450,000 rather than adding $375,000 to its tax loss. This will provide innovative start-ups with the certainty they need to invest in growing their business.
The exposure draft legislation follows on from the consultation paper released in September 2009.
The new legislation is expected to be introduced into Parliament early this year – well ahead of the proposed July 1, 2010 start date for the new scheme.
The Government has called for submissions on the exposure draft legislation and explanatory materials by February 5.
The exposure draft legislation and explanatory materials are on the Treasury website: www.treasury.gov.au