Greens and Independent senators have announced their support for the government's $1.8 billion Research and Development Tax Credit system, boosting Labor's confidence that it will pass the upper house when debate resumes in July.
The credit system aims to deliver more funding to businesses that rely on innovation, research and development for future growth, including the manufacturing, ICT and biotech industries.
"It will deliver a 45 per cent refundable tax credit to companies with an aggregated turnover of less than $20 million and a 40 per cent non-refundable offset to all others," Innovation Minister Kim Carr said in a joint statement with Treasurer Wayne Swan.
The credit system was previously met with resistance by the Coalition, which pushed to retain the existing tax concession policy prior to the 2010 federal election. The system passed the House of Representatives, but only with the support of Greens and Independent parliamentarians, as well as rogue Nationals MP Tony Crook.
Following discussions with the Greens, the government will introduce quarterly payments for small and medium businesses from 1 January 2014.
The start date for the new credit system will be 1 July this year, deferred from its previous start date of 1 July 2010. The deferral has an overall impact of $40 million, with a negative impact of $310 million in 2011-12 and a positive impact of $270 million in 2012-13.
The Australian Information Industry Association (AIIA) has welcomed the increase in confidence for the credit system and the new payment terms.
"The shift from annual to quarterly payments for SMEs will provide important cash-flow benefits for businesses that are generating essential intellectual capital for Australia, often without the prospect of immediate returns," said AIIA CEO Ian Birks.
"The revised level of support for smaller companies also increases, effectively doubling the after-tax value of support."