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Budget 2006: R&D tax concession: a winner for business.



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Media Release The Hon Ian Macfarlane, MP

9 May 2006

R&D TAX CONCESSION - A WINNER FOR BUSINESS The R&D Tax Concession Programme will be boosted with another $28 million to build on the record amount being invested by the Australian Government to help Australian businesses increase their expenditure on research and development.

Australian Industry Minister, Ian Macfarlane, has announced funding of $28 million to further delivery of the programme over the next four years.

“The R&D Tax Concession has been one of the Government’s flagship programmes for boosting business investment in research and development in a period which has seen Australia record its highest ever levels of business R&D investment.”

“This programme has grown at an average rate of 18 per cent a year over the past four years and is expected to continue to grow as Australian business now invests more than $7 billion annually in research and development.”

“The extra funding will help push the programme into corners of business which may not yet be accessing the R&D support that is available to them from the Government through concessions and deductions,” said Mr Macfarlane.

Since the 2001 introduction of the 175% Premium and Tax Offset in 2001, there has been a significant jump in the use of the programme.

During 2003-04 more than 5600 companies registered under the R&D Tax Concession, a record level, almost 600 more than the previous year.

In 2003-04, business uptake of the R&D Tax Offset for small business increased by 19 per cent and participation in the 175% Premium R&D Tax Concession grew by 16 per cent with more than 890 companies investing $2.4 billion in R&D.

The extra funding for delivery of the programme will ensure an average of about $414 million in R&D Tax Concessions continues to be rolled out across Australian business every year.

“Investment in research and development is critical for securing a strong economic future and building on the international competitiveness of our industry sectors.”

“It is the important first step of the innovation cycle which this government further invests in through specific commercialisation and proof-of-concept assistance like the $1 billion Commercial

Ready programme,” said Mr Macfarlane.

Fact sheet

Department contact: Tricia Berman (02) 6213 7444

Media contact: Kirsty Boazman (02) 6213 7580 or 0412 171 444

Supporting Information

Why is this important?

z The R&D Tax Concession Programme is a key support programme for

enhancing and increasing business investment in research and development activity. z Over the past four years, use of the programme has grown at an

average of 18 per cent each year. z This funding will increase the effectiveness of the delivery of the R&D

Tax Concession Programme. It will enable programme administration to keep pace with the strong growth in use of the Programme.

Who will benefit? z Businesses wishing to claim the R&D Tax Concession will continue to receive support and guidance to register their R&D activities, and for ongoing assurance and review processes.

What funding is the Government committing to the initiative?

z $28 million to the Department of Industry, Tourism and Resources to

support delivery of the R&D Tax Concession for the next four years. The Department will also be provided $3.1 million for depreciation of the management information system.

What have we done in the past? z The 125% concession on eligible R&D expenditure by companies was boosted in 2001 with the introduction of the 175% R&D Tax

Concession and Tax Offset. These elements were introduced to stimulate firms to increase their R&D spending and encourage small firms, especially those in tax loss, to invest in R&D. z The 2001 changes to the R&D Tax Concession Programme have

contributed strongly to overall growth. In 2003-04, business uptake of the R&D Tax Offset for small business increased by 19 per cent over the previous year with more than 2350 small businesses investing around $663 million in R&D. z In the same year, participation in the 175% Premium R&D Tax

Concession grew by 16 per cent with more than 890 companies investing $2.4 billion in R&D.

When will the initiative conclude? z This support is ongoing.