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Tax Laws Amendment (Research and Development) Bill 2011

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7011

2010

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

 

 

Tax Laws Amendment (Research and Development) Bill 2010

 

 

[Unlabelled amendments relate to changing commencement of the Schedules to 1 July 2011]

(1)     Clause 3, page 2 (table), omit the table (but not the note), substitute:

         

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1.  Sections 1 to 3 and anything in this Act not elsewhere covered by this table

The day this Act receives the Royal Assent.

 

2.  Schedules 1, 2, 3 and 4

1 July 2011.

 

(2)     Schedule 1, item 1, page 5 (lines 12 to 23), omit section 355-5, substitute:

355-5  Object

             (1)  The object of this Division is to increase the number of businesses that conduct research and development activities and to increase the level of such activities that individual businesses conduct, where this is likely to benefit the Australian economy.

             (2)  This object is to be achieved by providing a tax incentive for industry to conduct, in a scientific way:

                     (a)  research activities for the purpose of generating new knowledge or information in either a basic or applied form; or

                     (b)  experimental development activities to develop   new or improved materials, products, devices, processes or services;

that, if successful, may be able to be commercialised for the benefit of the Australian economy.

[object]

(R3)  Schedule 1, item 1, page 7 (line 14), omit “(1)”.

[removal of “dominant purpose” ]

(R4)  Schedule 1, item 1, page 7 (lines 16 to 21), subsection 355-30(2) TO BE OPPOSED .

[removal of “dominant purpose” ]

(R5)  Schedule 1, item 1, page 8 (table item 1), after “apply)”, add “where, in calculating aggregate turnover, references in section 328-125 to at least 40% are read as references to greater than 50%”.

[aggregate turnover grouping test]

(R6)  Schedule 1, item 1, page 9 (table before line 1, table item 2), omit paragraph (a), substitute:

 

(a) references in section 328-125 to at least 40% were references to greater than 50%; and

 

[aggregate turnover grouping test]

(7)     Schedule 1, item 1, page 12 (line 11), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(8)     Schedule 1, item 1, page 12 (line 13), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(R9)  Schedule 1, item 1, page 15 (lines 27 to 29), omit paragraph 355-225(1)(a), substitute:

                     (a)  expenditure of a capital nature that is incurred to acquire or construct:

                              (i)  a building or a part of a building; or

                             (ii)  an extension, alteration or improvement to a building;

                            that is to be *held by the R &D entity;

[buildings]

(R10)   Schedule 1, item 1, page 21 (line 8) to page 22 (line 4), section 355-405 TO BE OPPOSED .

[expenditure not at risk]

(11)   Schedule 1, item 1, page 22 (line 36), omit “only”.

[disposal of results of R &D]

(12)   Schedule 1, item 1, page 23 (line 4), omit “only”.

[disposal of results of R &D]

(13)   Schedule 1, item 1, page 23 (line 9), omit “otherwise”, substitute “if neither of paragraphs (a) and (b) apply”.

[disposal of results of R &D]

(14)   Schedule 1, item 1, page 27 (line 6) to page 29 (line 7), omit Subdivision 355-H, substitute:

Subdivision 355-H Feedstock adjustments

Table of sections

355-460    What this Subdivision is about

355-465    Feedstock adjustment to R&D expenditure

355-470    Experimental production activity

355-475    Application to connected entities and affiliates

355-460   What this Subdivision is about

Where an R &D activity that is an experimental production activity produces product held for sale, applied to own use or further processing, then the value of the tax offset for that R &D activity is reduced by the lower of:

               (a)     the expenditure on feedstock goods, materials and energy that are transformed or processed into the stock or assets; and

              (b)     the value of the feedstock output produced by the R &D activity.

355-465   Feedstock adjustment to R&D expenditure

             (1)  This section applies to an *R &D entity and an *experimental production activity for an income year if:

                     (a)  the entity incurs expenditure in the income year in acquiring or producing feedstock inputs for the *experimental production activity; and

                     (b) the entity obtains under section 355-100 *tax offsets for one or more income years for deductions under this Division in relation to the *experimental production activity:

                              (i)  for expenditure on feedstock inputs for the *experimental production activity; or

                             (ii)  for expenditure it incurs on any energy input directly into the transformation or processing of such feedstock inputs; and

                     (c)  the entity recovers value in the income year from feedstock outputs of the *experimental production activity by:

                              (i)  sale of the feedstock outputs; or

                             (ii)  using them as feedstock inputs into further processing or transformation; or

                            (iii)  applying them to its own use.

             (2)  The expenditure eligible for the *tax offset under section 355-100 for the *experimental production activity is reduced in the income year by the lesser of:

                     (a)  the total expenditure giving rise to the deductions mentioned in paragraph (1)(b), apart from expenditure that has already been used under this paragraph; and

                     (b)  the value recovered under paragraph (1)(c), worked out as follows:

                              (i)  if the feedstock output is sold in that year without further transformation or processing after the *experimental production activity, then the value is the consideration received for the goods or materials produced by this *experimental production activity;

                             (ii)  otherwise, the value is the market value of the feedstock output at the first point it is able to be valued after the completion of the *experimental production activity.

             (3)  For this section, feedstock inputs are goods or materials that are transformed or processed during an *experimental production activity into one or more tangible products (the feedstock outputs ).

355-470   Experimental production activity

             (1)  An experimental production activity is the collection of all the necessary *R &D activities needed to be carried out to achieve the objective of a production trial, except for those activities that are only to acquire or produce feedstock inputs.

             (2)  An *experimental production activity includes all *R &D activities required to undertake the trial and produce the feedstock outputs to the point that these can reasonably be valued as finished goods or materials or intermediate goods or materials to be further processed or transformed in activities after the production trial.

355-475   Application to connected entities and affiliates

                   This Subdivision applies to a * supply or use of the marketable product by:

                     (a)  an entity * connected with the * R &D entity; or

                     (b)  an * affiliate of the R &D entity or an entity of which the R &D entity is an affiliate;

as if it were by the R &D entity.

[feedstock adjustments]

(15)   Schedule 1, item 1, page 29 (line 31), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(16)   Schedule 1, item 1, page 29 (line 33), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(17)   Schedule 1, item 1, page 38 (line 21), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(18)   Schedule 1, item 1, page 38 (line 23), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(19)   Schedule 1, item 4, page 43 (line 30), omit the definition of feedstock revenue , substitute:

experimental production activity has the meaning given by section 355-470.

[feedstock adjustments]

(20)   Schedule 2, item 1, page 47 (line 3) to page 48 (line 31), omit sections 27A and 27B, substitute:

27A   Registering R &D entities for R &D activities

             (1)  The Board must, on application by an R &D entity, decide whether to register or refuse to register the entity for one or more specified R&D activities for an income year.

Note 1:       A decision under this subsection is reviewable (see Division 5).

Note 2:       For requirements of applications, see section 27D.

             (2)  If the Board decides under subsection (1) to register the R &D entity, the Board must do so consistently with:

                     (a)  any findings already in force under subsection 27B(1) in relation to the application; and

                     (b)  any findings already in force under subsection 28A(1) (advance findings about the nature of activities) in relation to the R &D entity.

27B  Findings about applications for registration

             (1)  The Board may make one or more findings in relation to an R &D entity’s application for the purposes of subsection 27A(1) to the effect that all or part of the activities satisfy the definition of R &D activities in section 355-20 of the Income Tax Assessment Act 1997 .

Note:          A finding is reviewable (see Division 5).

             (2)  If the Board makes a finding under subsection (1) in relation to the R &D entity’s registration, the Board may specify in the finding the times to which the finding relates.

Example:    A finding under subsection (1) could specify the times during the registration year that a registered activity was an R &D activity.

             (3)  This section has effect subject to section 32B (findings cannot be inconsistent with any earlier findings).

[administrative changes]

(21)   Schedule 2, item 1, page 52 (lines 3 to 37), omit section 27J, substitute:

27J  Findings about a registration

             (1)  The Board may make one or more findings about an R &D entity’s registration under section 27A for an income year to the effect that all or part of the activities satisfy the definition of R &D activities in section 355-20 of the Income Tax Assessment Act 1997 .

Note:          A finding is reviewable (see Division 5).

             (2)  If the Board makes a finding under subsection (1) in relation to the R &D entity’s registration, the Board may specify in the finding the times to which the finding relates.

Example:    A finding under subsection (1) could specify the times during the registration year that a registered activity was an R &D activity.

             (3)  This section has effect subject to section 32B (findings cannot be inconsistent with any earlier findings).

[administrative changes]

(22)   Schedule 2, item 1, page 56 (line 20) to page 57 (line 3), omit subsection 28A(1), substitute:

             (1)  The Board must, on application by an R &D entity for a finding under this subsection about an activity, either:

                     (a)  find that all or part of the activity satisfies the definition of R &D activities in section 355-20 of the Income Tax Assessment Act 1997 for which the entity has been or could be registered under section 27A for an income year; or

                     (b)  find that all or part of the activity does not satisfy the definition of R &D activities in section 355-20 of the Income Tax Assessment Act 1997 for which the entity has been or could be registered under section 27A for an income year.

[administrative changes]

(23)   Schedule 3, page 99 (line 2), omit the Division heading.

[consequential - commencement change]

(24)   Schedule 3, item 42, page 99 (lines 6 and 7), omit the note.

[consequential - commencement change]

(25)   Schedule 3, Division 2, page 99 (lines 8 to 14), Division TO BE OPPOSED .

[consequential - commencement change]

(26)   Schedule 4, item 1, page 112 (line 7), omit “1 July 2010”, substitute “1 July 2011”.

(27)   Schedule 4, item 1, page 112 (lines 9 and 10), omit “1 July 2010”, substitute “1 July 2011”.

(28)   Schedule 4, item 1, page 112 (line 14), omit “1 July 2010”, substitute “1 July 2011”.

(29)   Schedule 4, item 1, page 112 (lines 15 and 16), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(30)   Schedule 4, item 1, page 112 (lines 18 and 19), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(31)   Schedule 4, item 1, page 112 (line 21), omit “2010-11”, substitute “2011-12”.

(32)   Schedule 4, item 3, page 113 (line 29), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(33)   Schedule 4, item 3, page 113 (line 31), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(34)   Schedule 4, item 3, page 113 (line 34), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(35)   Schedule 4, item 3, page 113 (line 35), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(36)   Schedule 4, item 3, page 113 (line 38), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(37)   Schedule 4, item 3, page 114 (line 2), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(38)   Schedule 4, item 3, page 114 (line 15), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(39)   Schedule 4, item 3, page 114 (line 18), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(40)   Schedule 4, item 3, page 114 (line 21), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(41)   Schedule 4, item 3, page 114 (line 23), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(42)   Schedule 4, item 8, page 116 (line 10), omit “ 1 July 2010 ”, substitute “ 1 July 2011 ”.

(43)   Schedule 4, item 12, page 118 (line 6), omit “1 July 2010”, substitute “1 July 2011”.

(44)   Schedule 4, item 12, page 120 (line 21), omit “1 July 2010”, substitute “1 July 2011”.

(45)   Schedule 4, item 14, page 123 (line 13), omit “1 July 2010”, substitute “1 July 2011”.

(46)   Schedule 4, item 15, page 124 (line 18), omit “2010-11”, substitute “2011-12”.

(47)   Schedule 4, item 15, page 124 (line 24), omit “ 2010-11 ”, substitute “ 2011-12 ”.

(48)   Schedule 4, item 15, page 124 (line 27), omit “ 2010-11 ”, substitute “ 2011-12 ”.

(49)   Schedule 4, item 15, page 124 (line 28), omit “ 2010-11 ”, substitute “ 2011-12 ”.

(50)   Schedule 4, item 15, page 125 (line 17), omit “1 July 2010”, substitute “1 July 2011”.

(51)   Schedule 4, item 15, page 128 (line 22), omit “1 July 2010”, substitute “1 July 2011”.

(52)   Schedule 4, item 15, page 131 (table, after line 31), insert:

355-410    Disposal of results of R&D activities under old Act

[disposal of results of R &D]

(53)   Schedule 4, item 15, page 131 (after line 32), before section 355-415, insert:

355-410   Disposal of results of R &D activities under old Act

                   If an R &D entity under the Income Tax Assessment Act 1997 (the new Act ) made claims under the former section 73B of the Income Tax Assessment Act 1936 (the old Act ) in relation to R &D activities under the old Act, then section 355-410 of the new Act applies in relation to the results of those activities as if they were R &D activities for the new Act.

[disposal of results of R &D]

(54)   Schedule 4, item 15, page 132 (line 10), omit “ 2010-11 ”, substitute “ 2011-12 ”.

(55)   Schedule 4, item 15, page 132 (line 12), omit “ 2010-11 ”, substitute “ 2011-12 ”.

(56)   Schedule 4, item 15, page 132 (line 17), omit “1 July 2010”, substitute “1 July 2011”.

(57)   Schedule 4, item 15, page 132 (line 27), omit “1 July 2010”, substitute “1 July 2011”.

(58)   Schedule 4, item 15, page 132 (line 33), omit “1 July 2010”, substitute “1 July 2011”.

(59)   Schedule 4, item 15, page 133 (line 6), omit “1 July 2010”, substitute “1 July 2011”.

(60)   Schedule 4, item 15, page 133 (line 24), omit “1 July 2010”, substitute “1 July 2011”.

(61)   Schedule 4, item 15, page 133 (lines 29 and 30), omit “1 July 2010”, substitute “1 July 2011”.

(62)   Schedule 4, item 15, page 134 (line 16), omit “1 July 2010”, substitute “1 July 2011”.

(63)   Schedule 4, item 15, page 134 (line 25), omit “1 July 2010”, substitute “1 July 2011”.



 

7011-EM

 

 

 

Tax Laws Amendment (Research and Development) Bill 2010

 

 

(Requests to be moved by Senator Colbeck on behalf of the Opposition in committee of the whole)

 

 

Statement pursuant to the order of

the Senate of 26 June 2000

 

 

 

 



Amendments (R3), (R4), (R5) and (R6)

The effect of these amendments will be to allow an increase in the number of claimants for tax deductions for research and development expenditure and to allow an increase in the amounts that can be claimed as tax deductions for research and development expenditure. This will increase amounts paid out under a refundable tax offset, which would be met from the standing appropriation in section 16 of the Taxation Administration Act 1953 , and the amendments are therefore presented as requests .

 

Amendments (R9) and (R10)

The effect of amendments (R9) and (R10) will be to allow tax deductions for expenditure that was not previously tax deductible as research and development expenditure. This too will increase amounts paid out under a refundable tax offset, which would be met from the standing appropriation in section 16 of the Taxation Administration Act 1953 , and the amendments are therefore presented as requests .

 

 

 

 

 

 

 

Statement by the Clerk of the Senate pursuant

to the order of the Senate of 26 June 2000

 

 

 



The Senate has long accepted that an amendment should take the form of a request if it would have the effect of increasing expenditure under a standing appropriation. If it is correct that these amendments require the Commissioner of Taxation to refund amounts payable from a standing appropriation, it is in accordance with the precedents of the Senate that the amendments be moved as requests.