Senate

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

General outline and financial impact

Research and development tax incentive - targeting access

This Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to deny access to the research and development (R & D) tax incentive for companies with aggregated assessable income of $20 billion or more for an income year. The amendment better targets the R & D tax incentive to businesses that are more likely to increase their R & D spending in response to government incentives, delivering a greater return for taxpayers.

Date of effect: The measure applies to R & D entities' income years starting on or after 1 July 2013. This is before the date of enactment but it would not catch taxpayers unawares because the measure was previously introduced in a Bill that lapsed when the Parliament was prorogued for the 2013 federal election.

Proposal announced: This measure was announced on 17 February 2013 as part of the previous government's Industry and Innovation Statement, 'A Plan for Australian Jobs'. The Government announced its reintroduction on 6 November 2013.

Financial impact: This measure is estimated to have a gain to revenue of $1.1 billion over the forward estimates period.

Human rights implications: This measure does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 1, paragraphs 1.26 to 1.29.

Compliance cost impact: This measure does not raise any compliance cost issues. The Office of Best Practice Regulation determined that a regulation impact statement was not required for this measure.