The government's overhaul of the research and development tax credit system is one step closer to fruition, following the passing of the Tax Laws Amendment (Research and Development) Bill 2010 through the House of Representatives yesterday.
Innovation Minister Kim Carr said that businesses will get more support for research and development under the legislation.
"The new R&D Tax Credit will help small and large businesses to innovate, to become more productive and compete in a global economy, preserving and creating jobs for Australians," Carr said in a statement. "Reforming business R&D support will deliver better value for money for business and Australian taxpayers than the current R&D Tax Concession."
"The outmoded Tax Concession failed to deliver sufficient incentives to Australia's engine room & small and medium enterprises and allowed some companies to use taxpayer dollars to subsidise 'business-as-usual' activities, rather than genuine R&D," he said.
The proposed credit system is a 45 per cent refundable R&D tax credit to organisations that are not more than 50 per cent owned or controlled by a tax exempt entity and have an aggregated turnover of less than $20 million per annum. All other companies receive a 40 per cent non-refundable R&D tax credit. The government expects to hand out $1.6 billion in tax credits annually.
The legislation for the new scheme was entered into the parliament in May but had not been passed prior to the calling of the Federal Election.
In the course of the 2010 election campaign, the Coalition proposed maintaining the existing R&D concession system, and in parliament yesterday the Coalition voted against the Bill. However the Bill passed with the support of Greens MP Adam Bandt, rogue Nationals MP Tony Crook and Independent members Bob Katter, Tony Windsor, Rob Oakeshott and Andrew Wilkie.
Shadow Innovation Minister Sophie Mirabella said the legislation would not make it easier for businesses to claim back research and development costs.
"What [Labor] has repeatedly and cynically failed to mention is that it is so drastically restricting eligibility criteria that far fewer businesses and activities will actually qualify for assistance in the first instance," Mirabella said in parliament yesterday. "It argues that its changes will be revenue neutral, but everyone out there in the real world knows full well that this is a revenue-raising measure."
The Bill will now be passed onto the Senate for further scrutiny.