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Govt asks how it should police R&D scheme

Organisations will be able to have their say on how the proposed Research and Development Tax Credit system is managed, with Innovation Minister Kim Carr releasing the program's draft administrative agreements for comment late yesterday.
Written by Michael Lee, Contributor

Organisations will be able to have their say on how the proposed Research and Development Tax Credit system is managed, with Innovation Minister Kim Carr releasing the program's draft administrative agreements for comment late yesterday.

The credit system aims to encourage small and medium-sized businesses, which Carr says are generally constrained by cash flow, to invest in research and development. Businesses that invest in R&D will be eligible for a 45 per cent refundable tax offset if they have a turnover of less than $20 million per annum, and otherwise can have a non-refundable 40 per cent tax offset.

"By making the R&D incentive more attractive to small and medium-sized businesses the government's tax incentives will be distributed more fairly than has been the case under the current R&D Tax Concession. This will herald a new era of innovation, design and production," he said.

Although the details of monetary compensation have been hammered out for the scheme, the government now wants to look at how it will be administered and is asking for industry to comment on the ideas it's laid out in two documents, the Industry Research and Development Regulations 2011 and the Industry Research and Development Decision-making Principles 2011.

The regulations document examines the conditions and criteria that must be met for a company to operate as a research service provider, what information needs to go on certificates stating an organisation's R&D credentials, and the information to be provided for forms such as those used to register R&D activities.

The decision-making document examines four areas relating to how the Innovation Australia board will act when it makes decisions on issues such as deadline extensions, whether firms are eligible for funds and whether variations to registrations should be allowed.

Legislation for the credit system, contained in the Tax Laws Amendment (Research and Development) Bill 2010, awaits debate in the Senate once parliament sits for the spring session. It has already been passed through the House of Representatives and is expected to pass the final hurdle after Greens and Independent senators announced their support for the credit system last month.

The draft documents and a template for submitting responses are available online. Submissions close on 5 August.

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