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On 13 May 2010, Tax Laws Amendment (Research and Development) Bill 2010 and Income Tax Rates Amendment (Research and Development) Bill 2010 were introduced into the House of Representatives. The following is an extract from the Explanatory Memorandum.

The Bills implement the Government’s new tax incentive for research and development (R&D).

The new R&D tax incentive provides more generous benefits for eligible activities than the existing concession and is better targeted towards R&D that benefits Australia. It is also substantially simpler and accompanied by improved administrative arrangements. The new R&D tax incentive replaces the existing R&D Tax Concession for all income years starting on or after 1 July 2010.

The two core components of the new R&D incentive are:

  • a 45% refundable R&D tax offset for eligible entities
    with a turnover of less than $20 million; and
  • a non-refundable 40% R&D tax offset for all other
    eligible entities.

Accompanying this change of rates and delivery mechanism is a clearer and better targeted definition of eligible ‘R&D activities’ that will ensure that the incentive is available in circumstances consistent with the underlying rationale for government intervention and that it delivers value for money for taxpayers.

The Bills amend the ITAA 1936, the ITAA 1997, the Income Tax (Transitional Provisions) Act 1997, the Income Tax Rates Act 1986, the Taxation Administration Act 1953 and the Industry, Research and Development Act 1986.


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