Explanatory Memorandum
(Circulated by the authority of the Treasurer,the Hon. J. Kerin, M.P.)Chapter 6 Extension of the Research and Development Activities Concession
Overview
Extends the research and development tax concession at a maximum rate of deduction of 125% beyond 30 June 1995 indefinitely.
Summary of proposed amendments
6.1. The Bill will amend the Income Tax Assessment Act so as to extend the research and development tax concession beyond 30 June 1995.
Background to the legislation
6.2. The concession is currently available to an eligible company for expenditure incurred on or after 1 July 1985 on qualifying research and development activities in Australia.
6.3. The present concession is in the form of a deduction against assessable income of up to 150 per cent of expenditure incurred prior to 1 July 1993 reducing to 125 per cent from that date until 30 June 1995.
6.4. There are also special transitional arrangements for qualifying plant that is used prior to 1 July 1995 and written off after that date.
6.5. The concession was enacted by Parliament in order to promote research and development activities by industry in Australia.
6.6. The amendment proposed by this Bill will extend the concession beyond 30 June 1995.
Explanation of the proposed amendments
6.7. A deduction for research and development expenditure is currently allowable for expenditure incurred from 1 July 1985 to 30 June 1995. The period during which the deduction is allowable is referred to as the deduction period in sections 73B and 73C.
6.8. These amendments will remove the reference to the deduction period in sections 73B and 73C. This will have the effect of allowing a deduction beyond 30 June 1995 of up to 125% of expenditure incurred. [Clauses 35 and 36]
| Maximum Rates of Deduction | ||
|---|---|---|
| Date | Rate | |
| 1 July 85 to 30 June 93 | 150% | |
| 1 July 93 to 30 June 95 | 125% | |
| (Amendment) | From 1 July 95 | 125% |
Commencement date
6.9. The amendments will apply from the date that the Bill receives the Royal Assent.
Clauses involved in the proposed amendments
Clause 35 : removes the reference to deduction periods and the transitional arrangements for qualifying plant written off after 1 July 1995 in section 73B of the Act.
Clause 36 : removes the reference to deduction period in section 73C of the Act so as the concession only has a starting date.