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Industry Research and Development Act 1986

PART III - FUNCTIONS RELATING TO THE R & D TAX OFFSET

History

Pt III inserted by No 93 of 2011, s 3 and Sch 2 item 1, effective 8 September 2011. No 93 of 2011, s 3 and Sch 4 items 1 to 6 contains the following application, savings and transitional provisions:

Schedule 4 - Application, savings and transitional provisions

Part 1 - Application provisions
1 Application of repeals and amendments
(1)
The repeals and amendments made by this Act apply:

(a) so far as they affect assessments - to assessments for income years commencing on or after 1 July 2011; and

(b) so far as they relate to income years but do not affect assessments - to income years commencing on or after 1 July 2011; and

(c) otherwise - to acts done or omitted to be done, states of affairs existing, or periods ending on or after the commencement of the first income year commencing on or after 1 July 2011.
Note:

For the purposes of an assessment for an income year commencing on or after 1 July 2011, regard may still be had to acts done or omitted to be done, states of affairs existing, or periods ending during an earlier income year. For example, regard may be had to expenditure incurred by other entities in income years commencing before 1 July 2011 for the purposes of paragraph 355-415(1)(b) of the Income Tax Assessment Act 1997 .

(2)
However, each of the following applies in relation to the 2011-12 financial year and all later financial years:

(a) section 29E of the Industry Research and Development Act 1986 (as inserted by Schedule 2);

(b) the repeal of paragraph 39H(b) of the Industry Research and Development Act 1986 ;

(c) section 46 of the Industry Research and Development Act 1986 (as amended by this Act).

Part 2 - General savings provisions
2 Object
2
The object of this Part is to ensure that, despite the repeals and amendments made by this Act, the full legal and administrative consequences of:

(a) any act done or omitted to be done; or

(b) any state of affairs existing; or

(c) any period ending;
before such a repeal or amendment applies, can continue to arise and be carried out, directly or indirectly through an indefinite number of steps, even if some or all of those steps are taken after the repeal or amendment applies.
3 Making and amending assessments, and doing other things etc., in relation to past matters
(1)
Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ):

(a) making or amending an assessment (including under a provision that is itself repealed or amended);

(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);
in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.

Note:

Examples of things covered by this subitem are as follows:

(a) an eligible company may object under Part IVC of the Taxation Administration Act 1953 in an income year commencing on or after 1 July 2011 about a notice given under former section 73I of the Income Tax Assessment Act 1936 for an income year commencing before 1 July 2011;

(b) an eligible company seeking registration under former section 39J of the Industry Research and Development Act 1986 for an income year commencing before 1 July 2011 may do so during an income year commencing on or after 1 July 2011;

(c) Innovation Australia may give a certificate under former section 39M of the Industry Research and Development Act 1986 in an income year commencing on or after 1 July 2011 about research and development activities registered for an income year commencing before 1 July 2011.

(2)
Even though a provision is repealed or amended by this Act, the repeal or amendment is disregarded so far as it relates to a state of affairs:

(a) that exists after the repeal or amendment applies; and

(b) that relates to:

(i) an act done or omitted to be done; or

(ii) a state of affairs existing; or

(iii) a period ending;
before the repeal or amendment applies.
Note:

Examples of things covered by this subitem are as follows:

(a) an amount may be included in an eligible company ' s assessable income under former subsection 73BF(4) of the Income Tax Assessment Act 1936 for an income year commencing on or after 1 July 2011 if the company receives in that income year an amount for the results of research and development activities for which the company had deductions under former section 73BA of that Act in an income year commencing before 1 July 2011;

(b) an eligible company ' s deduction under section 73B of the Income Tax Assessment Act 1936 for expenditure incurred during an income year commencing before 1 July 2011 is reduced because of section 73C of that Act if, in an income year commencing on or after 1 July 2011, the company receives a recoupment of that expenditure from the Commonwealth.

(3)
To avoid doubt, this item extends to the repeal of subsection 286-75(3) , and paragraph 286-80(2)(b) , in Schedule 1 to the Taxation Administration Act 1953 . In particular, if, in a particular case, the period in respect of which an administrative penalty is payable under subsection 286-75(3) in that Schedule:

(a) has not begun; or

(b) has begun but not ended;
when those provisions are repealed, then, despite the repeal, those provisions continue to apply in the particular case until the end of the period.

4 Saving of provisions about effect of assessments
4
If a provision or part of a provision that is repealed or amended by this Act deals with the effect of an assessment, the repeal or amendment is disregarded in relation to assessments made, before or after the repeal or amendment applies, in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies. 5 Repeals disregarded for the purposes of dependent provisions
5
If the operation of a provision (the subject provision ) of any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ) made under any Act depends to any extent on a provision that is repealed by this Act, the repeal is disregarded so far as it affects the operation of the subject provision. 6 Schedule does not limit operation of the Acts Interpretation Act 1901
6
This Schedule does not limit the operation of the Acts Interpretation Act 1901 .

Former Part III repealed by No 15 of 2004, s 3 and Sch 1 item 27, effective 11 September 2004. No 15 of 2004, s 3 and Sch 1 item 28 contains the following transitional provisions:

28 Transitional provisions
(1)
Despite the amendments of the Industry Research and Development Act 1986 made by this Act:

(a) Ministerial directions in force immediately before the commencing day under section 19 of that Act in relation to a program of funding for research and development are taken to continue in force on and after that day for the purpose of facilitating the transitional arrangements set out in subitems (3) to (6); but

(b) a person or body may not make an application after that day in respect of a research and development proposal under such a program.

(2)
Nothing in subitem (1) implies that:

(a) the Minister may not give directions, on or after the commencing day, under section 18A of the Industry Research and Development Act 1986 , in relation to a program of funding for research and development that is substantially similar to the program for which directions had been given under section 19 of that Act; or

(b) a person or body may not make an application after that day in respect of a research and development proposal under such a substantially similar program.

(3)
If:

(a) before the commencing day, a person or body has made an application under the Industry Research and Development Act 1986 for the expenditure of Commonwealth money in respect of a research and development proposal; and

(b) that proposal is a proposal for research and development to be funded under a program to which Ministerial directions in force immediately before that day under section 19 of that Act apply;
then:

(c) that application may be considered and dealt with by the Industry Research and Development Board on and after that day; and

(d) any agreement in relation to the provision of Commonwealth money for that proposal may be entered into by or on behalf of the Board on and after that day;
as if the amendments made by this Schedule had not been made.

(4)
If:

(a) before the commencing day, the Board had entered into:

(i) an agreement under section 33 of the Industry Research and Development Act 1986 as in force at that time; or

(ii) an agreement under the Industry Research and Development Act 1986 in relation to a research and development program to which Ministerial directions in force immediately before that day under section 19 of the Industry Research and Development Act 1986 apply; and

(b) immediately before the commencing day, any obligation under that agreement is still required to be met;
that agreement continues in force, according to its terms, on and after that day, as if the amendments made by this Schedule had not been made.

(5)
The Industry Research and Development Board may from time to time, on or after the commencing day, for the purpose of determining whether obligations required to be met under an agreement referred to in subitem (3) or (4) are in fact being met, exercise any powers that had been conferred on the Board by or under the Industry Research and Development Act 1986 or by the agreement as if the amendments made by this Schedule had not been made.

(6)
Despite the amendments of the Industry Research and Development Act 1986 made by this Schedule, a prosecution may be instituted, on or after the commencing day, in respect of an offence concerning:

(a) an application made before that day for:

(i) the expenditure of Commonwealth money under a program to which Ministerial directions in force immediately before that day under section 19 of that Act apply; or

(ii) an advance in respect of money that may be paid under such a program; or

(b) if any agreement is entered into before, on or after that day in relation to such an application - any act or omission, or the provision of or failure to provide any information, in relation to the research and development to which the agreement relates;
as if those amendments had not been made.

(7)
In this item:
commencing day
means the date of commencement of Schedule 1 to this Act.

Part III formerly read:

PART III - GRANTS AND AGREEMENTS

Division 1 - Discretionary Grants
SECTION 26 ELIGIBLE ACTIVITIES
26
The Minister may, by notice in writing published in the Gazette , declare an activity to be an eligible activity for the purposes of the definition of eligible activity in subsection 4(1). SECTION 27 ELIGIBLE COMPANIES
27(1)
Where the Board considers that it would be consistent with the object of this Act for a company which proposes to commence to carry on an eligible activity in Australia to be an eligible company, the Board may, by resolution, declare that company to be an eligible company for the purposes of this Act other than Part IIIA.

27(2)
A declaration under subsection (1) may be revoked by a resolution of the Board (whether or not constituted by the persons constituting the Board at the time the declaration was made).
SECTION 28 AGREEMENTS FOR DISCRETIONARY GRANTS
28(1)
Where:

(a) a company, being an eligible company, is carrying out, or proposes to carry out, a project of research and development activities; or

(b) a company, not being an eligible company, is carrying out, or proposes to carry out, a project of research and development activities on behalf of 2 or more bodies corporate where at least one of those bodies corporate is an eligible company;
and the company makes an application to the Board for a grant under this Division in respect of the project, the Board, subject to this Act and to any relevant directions under section 20, may, in its discretion, enter into an agreement, on behalf of the Commonwealth, with the company, for and in relation to, the making of a grant of financial assistance under this Division to the company in respect of expenditure in respect of the project incurred or to be incurred by the company.

28(2)
The Board shall not enter into an agreement under subsection (1):

(a) after 30 June 1996; or

(b) in relation to a project that will commence after that day.
SECTION 29 RESTRICTIONS APPLICABLE TO DISCRETIONARY GRANTS
29(1)
There shall be specified in a discretionary grant agreement:

(a) the financial year or years in which any discretionary grant is, or discretionary grants are, to be payable under the agreement; and

(b) the amount of the discretionary grant, or the aggregate of the amounts of the discretionary grants, payable under the agreement in that year or in each of those years.

29(2)
The provisions of a discretionary grant agreement shall be such that the amount of the discretionary grant, or of the aggregate of the discretionary grants, payable to a company under the agreement shall not exceed an amount equal to 50% of the total amount that, in the opinion of the Board, is or will be the expenditure incurred, or to be incurred, by the company, after the date of the making of the application because of which the agreement is entered into, in respect of the project to which the agreement relates.

Division 2 - Generic Technology Grants
SECTION 30 GENERIC TECHNOLOGY
30(1)
The Minister may, by notice in writing published in the Gazette , declare an area of technology to be an area of generic technology for the purposes of this Act.

30(2)
Without limiting the generality of subsection (1), the Minister may make a declaration under that subsection in relation to:

(a) an area of technology that includes other areas of technology; or

(b) an area of technology that is included in another area of technology.

30(3)
Subject to subsection (4), a declaration under subsection (1) remains in force for 3 years unless it is revoked.

30(4)
Where:

(a) a declaration under subsection (1) of an area of generic technology has been in force for longer than 2 years; and

(b) the Minister, after reviewing the effectiveness of support for research and development activities in that area and all other matters that he or she considers relevant, is satisfied that the period for which the declaration should remain in force should be longer than 3 years;
the Minister (whether or not an earlier declaration or declarations under this subsection in relation to that area has or have been made) may, by notice in writing published in the Gazette specifying the longer period, declare that the declaration under subsection (1) is to remain in force for that longer period unless it is revoked.

SECTION 31 AGREEMENTS FOR GENERIC TECHNOLOGY GRANTS
31(1)
Where a researcher is carrying out, or proposes to carry out, a project of research and development activities in an area of generic technology and the researcher makes an application to the Board for a grant under this Division in respect of the project, the Board, subject to this Act and to any relevant directions under section 20, may, in its discretion, enter into an agreement, on behalf of the Commonwealth, with the researcher for and in relation to the making of a grant of financial assistance under this Division to the researcher in respect of expenditure in respect of the project incurred or to be incurred by the researcher.

31(2)
The Board shall not enter into an agreement under subsection (1):

(a) after 30 June 1996; or

(b) in relation to a project that will commence after that day.
SECTION 32 RESTRICTIONS APPLICABLE TO GENERIC TECHNOLOGY GRANT AGREEMENTS
32(1)
There shall be specified in a generic technology grant agreement:

(a) the financial year or years in which any generic technology grant is, or generic technology grants are, to be paid under the agreement; and

(b) the amount of the generic technology grant, or the aggregate of the amounts of the generic technology grants, payable under the agreement in that year or in each of those years.

32(2)
A generic technology grant agreement may be made in relation to a project in an area of technology which was an area of generic technology when the application for the generic technology grant in relation to the project was made but which has ceased to be an area of generic technology.

Division 3 - National Interest Agreements
SECTION 33 NATIONAL INTEREST AGREEMENTS
33(1)
Where the Board is satisfied that it is in the national interest that the Commonwealth should undertake a project of research and development activities, the Board, subject to this Act and to any relevant directions under section 20, may, on behalf of the Commonwealth, enter into an agreement with a researcher for the carrying out of that project.

33(2)
The Minister may request the Board to consider entering into a national interest agreement in respect of a project of research and development activities specified by the Minister.

33(3)
A researcher may make an application to the Board for a national interest agreement.
SECTION 34 PROVISIONS OF NATIONAL INTEREST AGREEMENTS
34(1)
A national interest agreement:

(a) may provide that the Commonwealth is to bear the total amount that is or will be the expenditure on the project to which the agreement relates;

(b) where paragraph (a) applies to the agreement - shall provide that all incorporeal property resulting from the project shall belong to the Commonwealth; and

(c) where paragraph (a) does not apply to the agreement - shall provide that the Commonwealth shall have a share in all incorporeal property resulting from the project and that the share of the Commonwealth in any such incorporeal property shall bear to the sum of the shares in the property the same proportion as the total amount that is or will be paid by the Commonwealth under the agreement bears to the total amount that is or will be the expenditure on the project to which the agreement relates.

34(2)
In this section, incorporeal property includes copyrights, patent rights and trademarks.

Division 3A - National Procurement Development Program Agreements

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History

Div 3A inserted by No 66 of 1991.

SECTION 34A NATIONAL PROCUREMENT DEVELOPMENT PROGRAM AGREEMENTS
34A(1)
Subject to this Act and to any relevant directions under section 20, the Board may enter into an agreement, on behalf of the Commonwealth, with a corporate researcher and an Australian government body about a project directed towards meeting the demand, or likely demand, of one or more Australian government bodies or Australian government contractors for goods or services.

34A(1A)
The Board must not enter into an agreement under subsection (1) after the commencement of this subsection.

34A(2)
Except in special cases, the Board must not enter into a national procurement development program agreement unless it is satisfied that the project concerned:

(a) is directed towards the development of internationally competitive goods or services; and

(b) involves adequate trialling and demonstration activities.

34A(3)
The Board may refuse to enter into a national procurement development program agreement about a project if the carrying out of the agreement would be likely to give an undue competitive advantage to an Australian government body that carries on business.

34A(4)
A corporate researcher or an Australian government body, or both, may make an application to the Board for a national procurement development program agreement.

34A(5)
In this section:
goods or services
includes the result of a designated activity.

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S 34A inserted by No 66 of 1991, and amended by No 78 of 1996.

SECTION 34B DESIGNATED ACTIVITIES
34B
The Minister may, by notice published in the Gazette , declare an activity to be a designated activity for the purposes of the definition of designated activity in subsection 4(1).
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S 34B inserted by No 66 of 1991.

Division 4 - Miscellaneous
SECTION 35 APPLICATIONS
35(1)
An application shall be in accordance with a form approved by the Board.

35(2)
An application shall be deemed not to have been made until it has been received on behalf of the Board by a member of the staff assisting the Board or by a person appointed by the Board to receive applications.

35(3)
The Board may refuse to consider an application unless the applicant furnishes such further information, or makes available to the Board such books or records, as the Board specifies, being information, books or records that the Board requires for the performance of its functions under this Act, including the preparation of a report of the Board under section 46.
SECTION 36 RESULTS OF PROJECTS TO BE EXPLOITED
36
The Board shall not enter into an agreement under this Act in relation to a project of research and development activities unless it is satisfied that the results of that project will, where appropriate, be exploited on normal commercial terms and otherwise in a manner that will be for the benefit of the Australian economy. SECTION 37 ADJUSTMENT OF SUBSIDIES BECAUSE OF FINANCIAL ASSISTANCE
37
Where a researcher has received financial assistance otherwise than under this Act (whether or not from, or out of money provided by, the Commonwealth) and it appears to the Board that the financial assistance has aided the researcher to carry out a project that is the subject of an agreement under this Act, the Board may reduce the amount of any subsidy to the researcher in respect of that project to such extent as it thinks appropriate because of that financial assistance. SECTION 38 REPAYMENT OF SUBSIDIES ON BREACH OF AGREEMENT
38(1)
Nothing in this Act shall be taken as preventing the inclusion in an agreement under this Act with a researcher of provision for the repayment by the researcher to the Commonwealth on breach by the researcher of the agreement, or in any other circumstances specified in the agreement, of the whole or a part of a subsidy paid to the researcher under the agreement.

38(2)
This Act does not prevent the inclusion in a national procurement development program agreement with an Australian government body of provision for the repayment by that body to the Commonwealth on breach by the body of the agreement, or in any other circumstances specified in the agreement, of the whole or a part of a subsidy paid to the body under the agreement.
SECTION 39 PAYMENTS TO BE MADE TO PERSONS INCURRING COST
39
Nothing in this Act or in an agreement under this Act shall be read as allowing the payment of any subsidy payable under an agreement under this Act in respect of a project otherwise than to:

(a) the person incurring the cost of that project; or

(b) where that person has assigned the right to receive the payment to another person and has notified the Board in writing of the assignment - that other person.

Division 1 - Introduction

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SECTION 26A

26A SIMPLIFIED OUTLINE

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The following is a simplified outline of this Part:

• The Board may, on application by an R & D entity, register the R & D entity for R & D activities. This registration is needed before the R & D entity can be entitled to a tax offset (an R & D tax offset ) under Division 355 of the Income Tax Assessment Act 1997 for the R & D activities.

• The R & D entity can seek an advance finding to get early notice about whether an activity is considered to be an R & D activity.

• The R & D entity can seek a finding that an activity cannot be conducted in Australia. The finding is needed before expenditure incurred on the activity can count towards an R & D tax offset.

• The Board may register entities as research service providers capable of providing research services to R & D entities.

• Internal and external review can be sought for certain decisions under this Part.

• The Board may make general determinations about how it will exercise its powers, and perform its functions and duties, under this Part. The Board must act in accordance with such a determination.

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