Consultation paper released on new R&D tax credit

On 18 September 2009, the Treasurer and Minister for Innovation, Industry, Science and Research released a consultation paper on the new research and development tax incentive.  The incentive, announced as part of the 2009-2010 Budget, represents a significant change to the taxation of R&D expenditure in Australia. 

The new R&D Tax Credit will replace the existing R&D Tax Concession with effect from 1 July 2010 (see our previous alert).  The incentive implements the key elements of the Cutler report on the Review of the National Innovation System regarding R&D taxation.

Friday’s consultation paper includes detail that was not part of the government’s initial announcement.  For example, it clarifies that the new R&D tax incentive will not consider whether IP from an eligible R&D activity is owned in Australia or overseas.  There are other areas flagged for further stakeholder consultation, such as the treatment of software R&D.

The release of the consultation paper marks the beginning of a stakeholder consultation process on the detail and design of the new incentive.  AusIndustry is hosting public consultation sessions over September / October.  Interested parties may make submissions by 26 October 2009.  A further round of public consultation on exposure drafts of the legislation will occur later in the year.

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