Upcoming Mallesons seminarsClients undertaking research and development activities
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Mark Weber
Partner
T +61 3 9643 4304
Cheng Lim
Partner
T +61 3 9643 4193
Melbourne
Phillip Davies
Cheng Lim
Canberra
Adam Bartlett
The Government yesterday announced a major change to the taxation of Research and development (R&D) expenditure in its 2009 Federal Budget. Broadly, the announcement concerned the introduction of a new R&D Tax Credit to replace the existing R&D Tax Concessions with effect from 1 July 2010.
The new R&D Tax Credit will consist of a 40 per cent non-refundable tax credit and a 45 per cent refundable tax credit for firms with a turnover of $20 million or less. This means that eligible firms will receive a tax refund of 45 per cent of their R&D expenditure when they file their tax return.
Businesses with a turnover of more than $20 million will be able to access a 40 per cent non-refundable credit.
Foreign-owned firms who undertake R&D expenditure in Australia will also be eligible for the 40 per cent non-refundable tax credit.
The new refundable tax credit will not be subject to an expenditure cap. However, the definition of R&D that is eligible for the new R&D Tax Credit will be tightened to ensure that only “genuine R&D” is subject to the Credit. The Government said it will consult further on the eligibility criteria in developing legislation for the new Tax Credit. A consultation paper will be released in the next few months.
As an interim measure, until the program starts on 1 July 2010, the Government will lift the expenditure cap on eligible R&D that can be claimed under the existing R&D Tax Offset from $1 million to $2 million with effect from 1 July 2009.