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Wednesday, 29 April 1987
Page: 2032

(Question No. 1529)


Senator Reynolds asked the Minister representing the Treasurer, upon notice, on 18 November 1986:

(1) Can the Minister for Finance investigate the inequity of tax deductibility levels, which presently favour only applied scientific research?

(2) Will the Minister re-examine other areas of research which offer equal benefits to the Australian community and introduce tax deductibility provisions which are equally distributed across Australian research projects?


Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question:

(1) and (2) It is assumed that, in referring to different levels of tax deductibility in respect of scientific research, the honourable Senator is comparing the recently introduced 150% tax deduction scheme for expenditure by Australian companies on research and development with the general position where research expenditure may attract deductions of no more than 100%.

The 150% tax concession is aimed at improving the level of industrial research and development in Australia. For this purpose, research and development activities, mean systematic, investigative or experimental activities involving innovation or technical risk and carried on either for the purpose of acquiring new knowledge, whether or not having a specific practical application, or of creating new or improved materials, products, devices, processes or services. The concession is not limited to applied research, being that undertaken for the advancement of knowledge with a specific practical application in view. It applies also to basic research-that is, research undertaken to acquire new knowledge without any practical application in view-and to experimental development. Various activities are, however, specifically excluded from the scope of the concession-for example, market research, market testing and research in social sciences, arts or humanities.

Subject to technical and cost-effectiveness reviews, this specific purposes concession applies to expenditure incurred during the period 1 July 1985 and 30 June 1991. Whether or not the concession should be extended beyond that period or to research projects not presently within its scope would depend on the outcome of those reviews.