Supplementary Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon J. Dawkins M.P.)General Outline and Financial Impact
Research and Development Expenditure
The supplementary amendments will make deductions available for participants who incur research and development (R & D) expenditure to a government body or an associate, even if the participant has some guaranteed return, if the body is subject to Commonwealth income tax and operates on a fully commercial basis.
A set of guidelines detailing what criteria will be taken into account in ascertaining a government body's eligibility must be prepared by the Industry Research and Development Board (the Board).
A register ('Register of Commercial Government Bodies') must be prepared and administered by the Board and will list government bodies and their associates which satisfy these criteria.
Financial impact: no immediate cost
Royalty Withholding Tax
The amendment will make it clear that royalties, derived by a non-resident of a country with which Australia has concluded a double tax agreement (DTA) in carrying on business in Australia at or though a permanent establishment of the non-resident in Australia, are not to be subject to royalty withholding tax and are to remain subject to normal tax by assessment.
Revenue impact: None.