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This is a Bill, not an Act. For current law, see the Acts databases.
2019
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Treasury Laws Amendment (Research
and Development Tax Incentive) Bill
2019
No. , 2019
(Treasury)
A Bill for an Act to amend the
law in relation to
taxation, and for related purposes
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedules ........................................................................................... 2
Schedule 1--Better targeting the R&D Tax Incentive
3
Income Tax Assessment Act 1997
3
Tax Laws Amendment (Research and Development) Act 2015
7
Schedule 2--Enhancing the integrity of the R&D Tax Incentive
8
Part 1--Schemes to reduce income tax
8
Income Tax Assessment Act 1936
8
Part 2--R&D clawback and catch up amounts
11
Income Tax Assessment Act 1997
11
Income Tax Rates Act 1986
30
Income Tax (Transitional Provisions) Act 1997
30
Part 3--Application of amendments
36
Schedule 3--Improving the administration of the R&D Tax
Incentive
37
Part 1--Reporting of information about research and
development tax offset
37
Taxation Administration Act 1953
37
Part 2--Findings about clinical trials and determinations about
performance of Board's functions
39
Industry Research and Development Act 1986
39
Part 3--Delegation by Board and committees
43
Industry Research and Development Act 1986
43
Part 4--Extensions of time
44
Industry Research and Development Decision-making Principles 2011
44
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
1
A Bill for an Act to amend the
law in relation to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act is the
Treasury Laws Amendment (Research and
5
Development Tax Incentive) Act 2019
.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. The whole of
this Act
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedules
7
Legislation that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
Note:
The provisions of the
Industry Research and Development Decision
12
making Principles 2011
amended or inserted by this Act, and any
13
other provisions of that instrument, may be amended or repealed by an
14
instrument made under section 32A of the
Industry Research and
15
Development Act 1986
(see subsection 13(5) of the Legislation Act
16
2003
).
17
Better targeting the R&D Tax Incentive
Schedule 1
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
3
Schedule 1--Better targeting the R&D Tax
1
Incentive
2
3
Income Tax Assessment Act 1997
4
1 Subsection 63-10(1) (at the end of the cell at table item 35,
5
column headed "Tax offset")
6
Add "or is a tax offset to which subparagraph 67-30(1A)(a)(ii) applies".
7
2 Subsection 67-30(1)
8
Omit "if all or part of the amount of the tax offset is worked out using
9
the percentage in item 1 of the table in subsection 355-100(1)",
10
substitute "if the amount of the tax offset is worked out in accordance
11
with item 1 of the table in subsection 355-100(1) (disregarding
12
subsection 355-100(3))".
13
3 Subsection 67-30(1) (notes)
14
Repeal the notes, substitute:
15
Note:
Otherwise, the tax offset will be a non-refundable tax offset (see
16
item 35 of the table in subsection 63-10(1)).
17
4 After subsection 67-30(1)
18
Insert:
19
(1A) Despite subsection (1), if, disregarding the part (the
clinical trial
20
component
) mentioned in subsection (1B) of the
*
tax offset (the
21
original offset
), the amount of the tax offset exceeds $4 million,
22
this Act applies as if:
23
(a) the
*
R&D entity were entitled under section 355-100 to:
24
(i) a tax offset equal to the sum of the clinical trial
25
component and $4 million; and
26
(ii) another tax offset equal to the difference between the
27
original offset and the tax offset mentioned in
28
subparagraph (i); and
29
(b) the tax offset mentioned in subparagraph (a)(ii) were not
30
subject to the refundable tax offset rules.
31
Schedule 1
Better targeting the R&D Tax Incentive
4
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
(1B) The part is such amount of the
*
tax offset as is attributable to
1
amounts mentioned in subsection 355-100(1) that relate
to
*
R&D
2
activities that are registered under paragraph 27A(1)(c) of the
3
Industry Research and Development Act 1986
as activities that
4
formed part of a clinical trial conducted during the income year.
5
(1C) A
clinical trial
is a planned study of the safety or efficacy in
6
humans of an intervention (including a medicine, vaccine,
7
treatment, diagnostic procedure or medical device) with the aim of
8
achieving at least one of the following:
9
(a) the discovery, or verification, of clinical, pharmacological or
10
pharmacodynamic effects;
11
(b) the identification of adverse reactions or adverse effects;
12
(c) the study of absorption, distribution, metabolism or
13
excretion.
14
5 Subsection 355-100(1) (heading)
15
Repeal the heading, substitute:
16
If notional deductions are between $20,000 and $150 million
17
6 Subsection 355-100(1) (cell at table item 1, column headed
18
"The percentage is:")
19
Repeal the cell, substitute:
20
the R&D entity's
*
corporate tax rate for
the income year, plus 13.5 percentage
points
7 Subsection 355-100(1) (table items 2 and 3, column headed
21
"The percentage is:")
22
Omit "38.5%", substitute "the R&D entity's
*
corporate tax rate for the
23
income year".
24
8 Subsection 355-100(1) (note)
25
Repeal the note, substitute:
26
Note 1:
The tax offset will generally be a refundable tax offset if item 1 of the
27
table applies (see section 67-30). However, if the amount of the tax
28
offset (disregarding any clinical trial component) exceeds $4 million,
29
Better targeting the R&D Tax Incentive
Schedule 1
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
5
part of the tax offset will not be refundable (see subsections 67-30(1A)
1
and (1B)).
2
Note 2:
The tax offset is increased under subsection (1A) of this section if
3
item 2 or 3 of the table applies.
4
9 After subsection 355-100(1)
5
Insert:
6
R&D premium
7
(1A) If item 2 or 3 of the table in subsection (1) applies to the
*
R&D
8
entity, the amount of the
*
tax offset for the income year is
9
increased by the sum of the amounts (if any) worked out for each
10
item of the following table for that entity:
11
12
Tiered offset rates
Item
Work out the part of the total
amount mentioned in
subsection 355-100(1) that:
Multiply that part by this
percentage:
1
exceeds nil but does not exceed 4%
of the
*
R&D entity's total expenses
for the income year worked out
under section 355-115
4.5%
2
exceeds 4% but does not exceed 9%
of the
*
R&D entity's total expenses
for the income year worked out
under section 355-115
8.5%
3
exceeds 9% of the
*
R&D entity's
total expenses for the income year
worked out under section 355-115
12.5%
10 Subsection 355-100(2)
13
Omit "However, if the total of those amounts is less than $20,000, the
14
*
R&D entity is instead entitled to a
*
tax offset for the income year equal
15
to that percentage of", substitute "However, if the total amount
16
mentioned in subsection (1) is less than $20,000, the
*
R&D entity is
17
instead entitled to a
*
tax offset for the income year, worked out in
18
accordance with subsections (1) and (1A), as if that amount were
19
instead".
20
Schedule 1
Better targeting the R&D Tax Incentive
6
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
11 Subsection 355-100(3)
1
Repeal the subsection (including the note), substitute:
2
If notional deductions exceed $150 million
3
(3) Despite subsections (1) and (1A), if the total amount mentioned in
4
subsection (1) exceeds $150 million, the
*
R&D entity is instead
5
entitled to a
*
tax offset for the income year equal to the sum of:
6
(a) the amount worked out in accordance with those subsections
7
as if that amount were $150 million; and
8
(b) the product of the excess and the R&D entity's
*
corporate tax
9
rate for the income year.
10
12 At the end of Subdivision 355-C
11
Add:
12
355-115 Working out an R&D entity's total expenses
13
(1) For the purposes of subsection 355-100(1A), an
*
R&D entity's
14
total expenses for an income year is the sum of the amounts
15
covered by subsection (2).
16
(2) The following amounts are covered by this subsection:
17
(a) the
*
R&D entity's total expenses for the income year worked
18
out in accordance with:
19
(i) the
*
accounting principles; or
20
(ii) if accounting principles do not apply in relation to the
21
R&D entity--commercially accepted principles relating
22
to accounting;
23
(b) any amount the R&D entity can deduct for the income year
24
as mentioned in subsection 355-100(1), to the extent the
25
amount is not covered by paragraph (a) for the income year.
26
Amounts counted once only
27
(3) For the purposes of subsection (2):
28
(a) disregard an amount to which paragraph (2)(a) otherwise
29
applies if paragraph (2)(b) has previously applied in relation
30
to the amount; and
31
Better targeting the R&D Tax Incentive
Schedule 1
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
7
(b) disregard an amount to which paragraph (2)(b) otherwise
1
applies if paragraph (2)(a) has previously applied in relation
2
to the amount.
3
13 Section 355-750
4
Repeal the section.
5
14 Subsection 995-1(1)
6
Insert:
7
clinical trial
has the meaning given by subsection 67-30(1C).
8
Tax Laws Amendment (Research and Development) Act 2015
9
15 Subsection 2(1) (table item 3)
10
Repeal the item.
11
16 Part 2 of Schedule 1
12
Repeal the Part.
13
17 Application of amendments
14
The amendments made by this Schedule apply in relation to
15
assessments for income years commencing on or after 1 July 2019.
16
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 1
Schemes to reduce income tax
8
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Schedule 2--Enhancing the integrity of the
1
R&D Tax Incentive
2
Part 1--Schemes to reduce income tax
3
Income Tax Assessment Act 1936
4
1 Subsection 177A(1)
5
Insert:
6
non-refundable R&D tax offset
means a tax offset allowed under
7
Division 355 of the
Income Tax Assessment Act 1997
, other than a
8
refundable R&D tax offset.
9
refundable R&D tax offset
means a tax offset allowed under
10
Division 355 of the
Income Tax Assessment Act 1997
that is
11
subject to the refundable tax offset rules under section 67-30 of
12
that Act.
13
2 After paragraph 177C(1)(bc)
14
Insert:
15
or (bd) a refundable R&D tax offset, or a non-refundable R&D tax
16
offset, being allowable to the taxpayer in relation to a year of
17
income where the whole or a part of the offset would not
18
have been allowable, or might reasonably be expected not to
19
have been allowable, to the taxpayer in relation to that year
20
of income if the scheme had not been entered into or carried
21
out;
22
3 At the end of subsection 177C(1)
23
Add:
24
; and (h) in a case to which paragraph (bd) applies--the amount of the
25
whole of the offset or of the part of the offset, as the case
26
may be, referred to in that paragraph.
27
4 At the end of subsection 177C(2)
28
Add:
29
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
Schemes to reduce income tax
Part 1
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
9
; or (f) a refundable R&D tax offset, or a non-refundable R&D tax
1
offset, being allowable to the taxpayer in relation to a year of
2
income the whole or a part of which offset would not have
3
been, or might reasonably be expected not to have been,
4
allowable to the taxpayer in relation to that year of income if
5
the scheme had not been entered into or carried out, where:
6
(i) the allowance of the offset to the taxpayer is attributable
7
to the making of a declaration, agreement, election,
8
selection or choice, the giving of a notice or the exercise
9
of an option by any person, being a declaration,
10
agreement, election, selection, choice, notice or option
11
expressly provided for by this Act; and
12
(ii) the scheme was not entered into or carried out by any
13
person for the purpose of creating any circumstance or
14
state of affairs the existence of which is necessary to
15
enable the declaration, agreement, election, selection,
16
choice, notice or option to be made, given or exercised,
17
as the case may be.
18
5 Subsection 177C(3)
19
Omit "or (e)(i)", substitute ", (e)(i) or (f)(i)".
20
6 After paragraph 177C(3)(cb)
21
Insert:
22
or (cc) the allowance of a refundable R&D tax offset, or a
23
non-refundable R&D tax offset, to a taxpayer;
24
7 At the end of subsection 177C(3)
25
Add:
26
; or (i) the refundable R&D tax offset, or non-refundable R&D tax
27
offset, would not have been allowable.
28
8 At the end of subsection 177CB(1)
29
Add:
30
; (f) the whole or a part of a refundable R&D tax offset, or of a
31
non-refundable tax offset, not being allowable to the
32
taxpayer.
33
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 1
Schemes to reduce income tax
10
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
9 After paragraph 177F(1)(e)
1
Insert:
2
or (f) in the case of a tax benefit that is referable to:
3
(i) a refundable R&D tax offset; or
4
(ii) a non-refundable R&D tax offset; or
5
(iii) a part of a refundable R&D tax offset; or
6
(iv) a part of a non-refundable R&D tax offset;
7
being allowable to the taxpayer in relation to a year of
8
income--determine that the whole or a part of the offset, or
9
the part of the offset, as the case may be, is not to be
10
allowable to the taxpayer in relation to that year of income;
11
10 After paragraph 177F(3)(f)
12
Insert:
13
or (g) if, in the opinion of the Commissioner:
14
(i) an amount would have been allowed, or would be
15
allowable, to the relevant taxpayer as a refundable R&D
16
tax offset, or a non-refundable R&D tax offset, in
17
relation to a year of income if the scheme had not been
18
entered into or carried out, being an amount that was not
19
allowed or would not, apart from this subsection, be
20
allowable, as the case may be, as a refundable R&D tax
21
offset, or a non-refundable R&D tax offset, as the case
22
may be, to the relevant taxpayer in relation to that year
23
of income; and
24
(ii) it is fair and reasonable that the amount, or a part of the
25
amount, should be allowable as a refundable R&D tax
26
offset, or a non-refundable R&D tax offset, as the case
27
may be, to the relevant taxpayer;
28
determine that that amount or that part, as the case may be,
29
should have been allowed or is allowable, as the case may be,
30
as a refundable R&D tax offset, or a non-refundable R&D tax
31
offset, as the case may be, to the relevant taxpayer in relation
32
to that year of income;
33
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
11
Part 2--R&D clawback and catch up amounts
1
Income Tax Assessment Act 1997
2
11 Section 4-25
3
Repeal the section, substitute:
4
4-25 Special provisions for working out your basic income tax
5
liability
6
Subsection 392-35(3) may increase your basic income tax liability
7
beyond the liability worked out simply by applying the income tax
8
rates to your taxable income.
9
Note:
Subsection 392-35(3) increases some primary producers' tax liability
10
by requiring them to pay extra income tax on their averaging
11
components worked out under Subdivision 392-C.
12
12 Subsection 9-5(1) (table item 4A)
13
Repeal the item.
14
13 Section 10-
5 (table item headed "R&D")
15
Omit:
16
feedstock adjustment ......................................................... 355-465
substitute:
17
recoupments and feedstock adjustments ........................... 355-450
14 Section 20-5 (table item 10)
18
Repeal the item, substitute:
19
10
An R&D entity:
• receives, or becomes entitled to
receive, a recoupment from
government relating to R&D
activities; or
• can deduct, under Division 355,
expenditure on goods, materials or
energy used during R&D activities to
produce marketable products or
Subdivision 355-G
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
12
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
products applied to the R&D entity's
own use;
and the entity is entitled under
Division 355 to a tax offset relating to
those R&D activities.
An amount is included in its assessable
income.
15 Subsection 40-292(1)
1
Omit "Note", substitute "Note 1".
2
16 At the end of subsection 40-292(1)
3
Add:
4
Note 2:
To the extent that any amount is included in your assessable income
5
under section 40-285 in relation to R&D activities, you may have an
6
additional amount included in your assessable income (see
7
section 355-447).
8
Note 3:
To the extent any amount that you are entitled to as a deduction under
9
section 40-285 relates to R&D activities, you may have an additional
10
amount you can deduct (see section 355-466).
11
17 Subsections 40-292(3) to (5)
12
Repeal the subsections.
13
18 Subsection 40-293(1)
14
Omit "Note", substitute "Note 1".
15
19 At the end of subsection 40-293(1)
16
Add:
17
Note 2:
To the extent any amount that is included in the R&D partnership's
18
assessable income under section 40-285 relates to R&D activities, a
19
partner may have an additional amount included in the partner's
20
assessable income (see section 355-449).
21
Note 3:
To the extent any amount that the R&D partnership is entitled to as a
22
deduction under section 40-285 relates to R&D activities, a partner
23
may have an additional amount the partner can deduct (see
24
section 355-468).
25
20 Subsection 40-293(3)
26
Repeal the subsection.
27
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
13
21 Paragraphs 355-100(1)(c) and (f)
1
Repeal the paragraphs.
2
22 Section 355-105
3
Before "An amount", insert "(1)".
4
23 At the end of section 355-105
5
Add:
6
(2) Subsection (1) does not apply to amounts that the
*
R&D entity can
7
deduct under the following:
8
(a) subsection 355-315(2);
9
(b) subsection 355-475(1);
10
(c) subsection 355-525(2).
11
24 Subdivision 355-E (heading)
12
After "
Notional deductions
", insert "
etc.
".
13
25 Section 355-300
14
Omit "notionally deduct" (second occurring), substitute "actually
15
deduct".
16
26 Subsection 355-315(2) (heading)
17
Repeal the heading.
18
27 At the end of subsection 355-315(2)
19
Add:
20
Note 1:
A deduction under this subsection is not a notional deduction (see
21
subsection 355-105(2)).
22
Note 2:
A deduction under this subsection results in a catch up amount for the
23
R&D entity (see section 355-465).
24
28 Subsection 355-315(3)
25
Repeal the subsection, substitute:
26
(3) If an amount would be included in the
*
R&D entity's assessable
27
income for the event year under subsection 40-285(1) for the asset
28
and the event if Division 40 applied as described in
29
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
14
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
paragraph (1)(e), that amount is included in the R&D entity's
1
assessable income for the event year.
2
Note:
Some or all of the amount included in the R&D entity's assessable
3
income may result in a clawback amount for the R&D entity (see
4
section 355-446).
5
29 Subdivisions 355-G and 355-H
6
Repeal the Subdivisions, substitute:
7
Subdivision 355-G--Clawback of R&D recoupments, feedstock
8
adjustments and balancing adjustments
9
Guide to Subdivision 355-G
10
355-430 What this Subdivision is about
11
An amount is included in an R&D entity's assessable income if:
12
(a)
the R&D entity receives a recoupment from government
13
of expenditure on R&D activities for which it has
14
obtained tax offsets under this Division; or
15
(b)
the R&D entity can deduct under this Division
16
expenditure on goods, materials or energy used during
17
R&D activities to produce marketable products or
18
products applied to the R&D entity's own use; or
19
(c)
a balancing adjustment event happens for an asset held
20
by the R&D entity (or an R&D partnership in which the
21
R&D entity is a partner) for which tax offsets have been
22
obtained under this Division and for which an amount is
23
otherwise included in the R&D entity's (or R&D
24
partnership's) assessable income.
25
Table of sections
26
Operative provisions
27
355-435 When this Subdivision applies
28
355-440 R&D recoupments
29
355-445 Feedstock adjustments
30
355-446 Balancing adjustments for assets only used for R&D activities
31
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
15
355-447 Balancing adjustments for assets partially used for R&D activities
1
355-448 Balancing adjustments for R&D partnership assets only used for R&D
2
activities
3
355-449 Balancing adjustments for R&D partnership assets partially used for R&D
4
activities
5
355-450 Amount to be included in assessable income
6
Operative provisions
7
355-435 When this Subdivision applies
8
This Subdivision applies to an
*
R&D entity for an income year (the
9
present year
) if:
10
(a) the R&D entity has an amount (a
clawback amount
) under
11
section 355-440, 355-445, 355-446, 355-447, 355-448 or
12
355-449 for the present year; and
13
(b) the R&D entity has received, or is entitled to receive, a
*
tax
14
offset under section 355-100 for one or more income years
15
(each an
offset year
) in relation to that clawback amount.
16
355-440 R&D recoupments
17
(1) The
*
R&D entity has an amount under this section if:
18
(a) the entity, or another entity mentioned in subsection (5),
19
receives or becomes entitled to receive a
*
recoupment from
20
either of the following (otherwise than under the
*
CRC
21
program):
22
(i) an
*
Australian government agency;
23
(ii) an STB (within the meaning of Division 1AB of Part III
24
of the
Income Tax Assessment Act 1936
); and
25
(b) the recoupment is received, or the entitlement to receive the
26
recoupment arises, during the present year; and
27
(c) either:
28
(i) the recoupment is of expenditure incurred on or in
29
relation to certain activities; or
30
(ii) the recoupment requires expenditure (the
project
31
expenditure
) to have been incurred, or to be incurred,
32
on certain activities.
33
Note:
Paragraph (c) includes expenditure incurred in purchasing a tangible
34
depreciating asset to be used when conducting R&D activities.
35
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(2) The amount is equal to the sum of:
1
(a) so much of the expenditure referred to in subsection (1) that
2
is deducted under this Division; and
3
(b) for each asset (if any) for which expenditure referred to in
4
subsection (1) is included in the asset's
*
cost--each amount
5
(if any) equal to the asset's decline in value that is deducted
6
under this Division;
7
that is taken into account in working out
*
tax offsets under
8
section 355-100 obtained by the
*
R&D entity for one or more
9
income years.
10
Note:
Paragraphs (a) and (b) of this subsection refer to amounts notionally
11
deducted under this Division (see section 355-105).
12
Amount is reduced by any repayments of the recoupment
13
(3) For the purposes of subsection (2), reduce the expenditure referred
14
to in subparagraph (1)(c)(i) by any repayments of the
*
recoupment
15
during an income year.
16
Cap on extra income tax if recoupment relates to a project
17
(4) Despite subsection (2), if the
*
recoupment is covered by
18
subparagraph (1)(c)(ii), the amount mentioned in subsection (2) for
19
the present year cannot exceed the amount worked out using the
20
following formula:
21
R&D expenditure
Net amount of the recoupment
Project expenditure
ï‚´
22
where:
23
net amount of the recoupment
means the total amount of the
24
*
recoupment, less any repayments of the recoupment during an
25
income year.
26
R&D expenditure
means the amount mentioned in subsection (2),
27
disregarding subsection (3).
28
Related entities
29
(5) The other entities for the purposes of paragraph (1)(a) are as
30
follows:
31
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(a) an entity
*
connected with the
*
R&D entity;
1
(b) an
*
affiliate of the R&D entity or an entity of which the R&D
2
entity is an affiliate.
3
355-445 Feedstock adjustments
4
(1) The
*
R&D entity has an amount under this section if:
5
(a) it incurs expenditure in one or more income years in
6
acquiring or producing goods, or materials, (the
feedstock
7
inputs
) transformed or processed during
*
R&D activities in
8
producing one or more tangible products (the
feedstock
9
outputs
); and
10
(b) it obtains under section 355-100
*
tax offsets for one or more
11
income years (each an
offset year
) for deductions under this
12
Division:
13
(i) for the expenditure; or
14
(ii) for expenditure it incurs on any energy input directly
15
into the transformation or processing; or
16
(iii) for the decline in value of assets used in acquiring or
17
producing the feedstock inputs; and
18
(c) during the present year, a feedstock output, or a transformed
19
feedstock output, (the
marketable product
), is:
20
(i)
*
supplied by the R&D entity to another entity; or
21
(ii) applied by the R&D entity to the R&D entity's own use,
22
other than use for the purpose of transforming that
23
product for supply.
24
(2) The amount is equal to the lesser of:
25
(a) the
*
feedstock revenue for the feedstock output; and
26
(b) so much of the total of the amounts deducted as described in
27
paragraph (1)(b) as is reasonably attributable to the
28
production of the feedstock output.
29
(3) Subsection (2) does not apply to the feedstock output if:
30
(a) it becomes, or is transformed into, a feedstock input; or
31
(b) that subsection already applies to the feedstock output
32
because of the application of paragraph (1)(c) to:
33
(i) an earlier time during the present year; or
34
(ii) an earlier income year.
35
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(4) The
feedstock revenue
, for the feedstock output, is worked out
1
using the following formula:
2
Cost of producing the feedstock output
Market value of the
marketable product
Cost of producing the marketable product
ï‚´
3
where:
4
market value of the marketable product
means the marketable
5
product's
*
market value at the time it is:
6
(a)
*
supplied by the
*
R&D entity to the other entity; or
7
(b) first applied by the R&D entity to the R&D entity's own use,
8
other than use for the purpose of transforming that product
9
for supply.
10
(5) This section applies to a
*
supply or use of the marketable product
11
by:
12
(a) an entity
*
connected with the
*
R&D entity; or
13
(b) an
*
affiliate of the R&D entity or an entity of which the R&D
14
entity is an affiliate;
15
as if it were by the R&D entity.
16
355-446 Balancing adjustments for assets only used for R&D
17
activities
18
(1) The
*
R&D entity has an amount under this section if:
19
(a) a
*
balancing adjustment event happens in the present year for
20
an asset
*
held by the R&D entity; and
21
(b) the R&D entity cannot deduct, for the asset for an income
22
year, an amount under section 40-25 as that section applies
23
apart from:
24
(i) this Division; and
25
(ii) former section 73BC of the
Income Tax Assessment Act
26
1936
; and
27
(c) the R&D entity is entitled under section 355-100 to
*
tax
28
offsets for one or more income years for deductions under
29
section 355-305 for the asset; and
30
(d) the R&D entity is registered under section 27A of the
31
Industry Research and Development Act 1986
for one or
32
more
*
R&D activities for the present year; and
33
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(e) an amount (the
section 40-285 amount
) is included in the
1
R&D entity's assessable income for the present year under
2
subsection 355-315(3) for the asset and the balancing
3
adjustment event.
4
Note 1:
This section applies in a modified way if the entity also has deductions
5
for the asset under former section 73BA or 73BH of the
Income Tax
6
Assessment Act 1936
(see section 355-320 of the
Income Tax
7
(Transitional Provisions) Act 1997
).
8
Note 2:
Section 40-292 applies if the entity can deduct an amount under
9
section 40-25, as that section applies apart from this Division and
10
former section 73BC of the
Income Tax Assessment Act 1936
.
11
(2) The amount is so much of an amount equal to the section 40-285
12
amount as does not exceed the difference between:
13
(a) the asset's
*
cost; and
14
(b) the asset's
*
adjustable value, worked out under Division 40
15
as if that Division applied with the changes described in
16
section 355-310.
17
355-447 Balancing adjustments for assets partially used for R&D
18
activities
19
(1) The
*
R&D entity has an amount under this section if:
20
(a) a
*
balancing adjustment event happens in the present year for
21
an asset
*
held by the R&D entity and for which:
22
(i) the R&D entity can deduct, for an income year, an
23
amount under section 40-25, as that section applies
24
apart from Division 355 and former section 73BC of the
25
Income Tax Assessment Act 1936
; or
26
(ii) the R&D entity could have deducted, for an income
27
year, an amount as described in subparagraph (i) if the
28
R&D entity had used the asset; and
29
(b) the R&D entity is entitled under section 355-100 to
*
tax
30
offsets for one or more income years for deductions (the
31
R&D deductions
) under section 355-305 for the asset; and
32
(c) an amount (the
section 40-285 amount
) is included in the
33
R&D entity's assessable income for the asset under
34
section 40-285 (after applying subsection 40-292(2)) for the
35
present year
.
36
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Treasury Laws Amendment (Research and Development Tax Incentive)
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No. , 2019
Note:
This section applies in a modified way if you have deductions for the
1
asset under former section 73BA or 73BH of the
Income Tax
2
Assessment Act 1936
(see section 40-292 of the
Income Tax
3
(Transitional Provisions) Act 1997
).
4
(2) The amount is worked out as follows:
5
Total R&D deductions
Adjusted section 40-285 amount
Total decline in value
ï‚´
6
where:
7
adjusted section 40-285 amount
means so much of an amount
8
equal to the section 40-285 amount as does not exceed the total
9
decline in value.
10
total decline in value
means the
*
cost of the asset less its
11
*
adjustable value.
12
355-448 Balancing adjustments for R&D partnership assets only
13
used for R&D activities
14
(1) The
*
R&D entity (the
partner
) has an amount under this section if:
15
(a) the partner is a partner in an
*
R&D partnership; and
16
(b) a
*
balancing adjustment event happens in the present year for
17
an asset
*
held by the R&D partnership; and
18
(c) the R&D partnership cannot deduct, for the asset for an
19
income year, an amount under section 40-25, as that section
20
applies apart from:
21
(i) this Division; and
22
(ii) former section 73BC of the
Income Tax Assessment Act
23
1936
; and
24
(d) the partner is entitled under section 355-100 to
*
tax offsets
25
for one or more income years for deductions under
26
section 355-520 for the asset; and
27
(e) the partner is registered under section 27A of the
Industry
28
Research and Development Act 1986
for one or more
*
R&D
29
activities for the present year; and
30
(f) an amount (the
section 40-285 amount
) would, as mentioned
31
in subsection 355-525(3), be included in the R&D
32
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partnership's assessable income for the present year for the
1
asset and the balancing adjustment event.
2
Note 1:
This section applies in a modified way if the partner has deductions
3
for the asset under former section 73BA or 73BH of the
Income Tax
4
Assessment Act 1936
(see section 355-325 of the
Income Tax
5
(Transitional Provisions) Act 1997
).
6
Note 2:
Section 40-293 applies if the R&D partnership can deduct an amount
7
under section 40-25, as that section applies apart from this Division
8
and former section 73BC of the
Income Tax Assessment Act 1936
.
9
(2) The amount is the partner's proportion of the amount that is so
10
much of an amount equal to the section 40-285 amount as does not
11
exceed the difference between:
12
(a) the asset's
*
cost; and
13
(b) the asset's
*
adjustable value, worked out under Division 40
14
as if that Division applied with the changes described in
15
section 355-310.
16
355-449 Balancing adjustments for R&D partnership assets
17
partially used for R&D activities
18
(1) The
*
R&D entity (the
partner
) has an amount under this section if:
19
(a) the partner is a partner in an
*
R&D partnership; and
20
(b) a
*
balancing adjustment event happens in the present year for
21
a
*
depreciating asset
*
held by the R&D partnership and for
22
which:
23
(i) the R&D partnership can deduct, for an income year, an
24
amount under section 40-25, as that section applies
25
apart from Division 355 and former section 73BC of the
26
Income Tax Assessment Act 1936
; or
27
(ii) the R&D partnership could have deducted, for an
28
income year, an amount as described in subparagraph (i)
29
if it had used the asset; and
30
(c) one or more partners (including the partner) in the R&D
31
partnership are entitled under section 355-100 to
*
tax offsets
32
for one or more income years for deductions under
33
section 355-520 for the asset; and
34
(d) an amount (the
section 40-285 amount
) is included in the
35
R&D partnership's assessable income for the asset under
36
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No. , 2019
section 40-285 (after applying subsection 40-293(2)) for the
1
present year.
2
(2) The amount is the partner's proportion of the amount worked out
3
as follows:
4
Total R&D deductions
Adjusted section 40-285 amount
Total decline in value
ï‚´
5
where:
6
adjusted section 40-285 amount
means so much of an amount
7
equal to the section 40-285 amount as does not exceed the total
8
decline in value.
9
total decline in value
means the
*
cost of the asset less its
10
*
adjustable value.
11
total R&D deductions
means the sum of each partner's deductions
12
mentioned in paragraph (1)(c) of this section.
13
355-450 Amount to be included in assessable income
14
(1) The
*
R&D entity must include, in the entity's assessable income
15
for the present year, the sum of the following amounts for each
16
offset year relating to the clawback amount:
17
*
Starting offset
Adjusted offset
Deduction amount
R&D entity's corporate tax rate for the present year
ï€-
ï€-
18
where:
19
adjusted offset
means the
*
tax offset the R&D entity would have
20
received under section 355-100 for the offset year if the total
21
amount mentioned in subsection 355-100(1) for that tax offset
22
were reduced by the portion of the clawback amount that is
23
attributable to the offset year.
24
deduction amount
means the portion of the clawback amount that
25
is attributable to the offset year, multiplied by the R&D entity's
26
*
corporate tax rate for the offset year.
27
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starting offset
means the amount of the
*
tax offset the R&D entity
1
has received, or is entitled to receive, under section 355-100 for the
2
offset year.
3
(2) However, if this section, or section 355-475, has previously applied
4
(whether in the present year or an earlier income year) in relation
5
to another clawback amount, or catch up amount, the
*
R&D entity
6
has that relates to the offset year, subsection (1) of this section
7
applies as if:
8
(a) the starting offset were the
*
tax offset the R&D entity would
9
have received under section 355-100 for the offset year if the
10
total amount mentioned in subsection 355-100(1) were:
11
(i) decreased by the sum of the portions of any such other
12
clawback amounts that are attributable to the offset
13
year; and
14
(ii) increased by the sum of the portions of any such other
15
catch up amounts that are attributable to the offset year;
16
and
17
(b) the reference to the "total amount" in the definition of
18
adjusted offset
were a reference to that amount as so
19
adjusted.
20
Subdivision 355-H--Catch up deductions for balancing
21
adjustment events for assets used for R&D activities
22
Guide to Subdivision 355-H
23
355-455 What this Subdivision is about
24
An R&D entity can deduct an amount under this Subdivision if:
25
(a)
a balancing adjustment event happens for an asset held
26
by the R&D entity (or an R&D partnership in which the
27
R&D entity is a partner); and
28
(b)
tax offsets have been obtained under this Division for
29
deductions for the asset; and
30
(c)
the R&D entity (or the R&D partnership) can otherwise
31
deduct an amount for the asset and the balancing
32
adjustment event.
33
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Table of sections
1
Operative provisions
2
355-460 When this Subdivision applies
3
355-465 Assets only used for R&D activities
4
355-466 Assets partially used for R&D activities
5
355-467 R&D partnership assets only used for R&D activities
6
355-468 R&D partnership assets partially used for R&D activities
7
355-475 Amount that can be deducted
8
Operative provisions
9
355-460 When this Subdivision applies
10
This Subdivision applies to an
*
R&D entity for an income year (the
11
present year
) if:
12
(a) the R&D entity has an amount (a
catch up amount
) under
13
section 355-465, 355-466, 355-467 or 355-468 for an asset
14
for the present year; and
15
(b) the R&D entity has received, or is entitled to receive, a
*
tax
16
offset under section 355-100 for one or more income years
17
(each an
offset year
) in relation to the asset.
18
355-465 Assets only used for R&D activities
19
(1) The
*
R&D entity has an amount under this section if:
20
(a) a
*
balancing adjustment event happens in the present year for
21
an asset
*
held by the R&D entity; and
22
(b) the R&D entity cannot deduct, for the asset for an income
23
year, an amount under section 40-25 as that section applies
24
apart from:
25
(i) this Division; and
26
(ii) former section 73BC of the
Income Tax Assessment Act
27
1936
; and
28
(c) the R&D entity is entitled under section 355-100 to
*
tax
29
offsets for one or more income years for deductions under
30
section 355-305 for the asset; and
31
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(d) the R&D entity is registered under section 27A of the
1
Industry Research and Development Act 1986
for one or
2
more
*
R&D activities for the present year; and
3
(e) the R&D entity can deduct, for the present year, an amount
4
under subsection 355-315(2) for the asset and the balancing
5
adjustment event.
6
Note 1:
This section applies in a modified way if the entity also has deductions
7
for the asset under former section 73BA or 73BH of the
Income Tax
8
Assessment Act 1936
(see section 355-320 of the
Income Tax
9
(Transitional Provisions) Act 1997
).
10
Note 2:
Section 40-292 applies if the entity can deduct an amount under
11
section 40-25, as that section applies apart from this Division and
12
former section 73BC of the
Income Tax Assessment Act 1936
.
13
(2) The amount is an amount equal to the amount mentioned in
14
paragraph (1)(e).
15
355-466 Assets partially used for R&D activities
16
(1) The
*
R&D entity has an amount under this section if:
17
(a) a
*
balancing adjustment event happens in the present year for
18
an asset
*
held by the R&D entity for which:
19
(i) the R&D entity can deduct, for an income year, an
20
amount under section 40-25, as that section applies
21
apart from Division 355 and former section 73BC of the
22
Income Tax Assessment Act 1936
; or
23
(ii) the R&D entity could have deducted, for an income
24
year, an amount as described in subparagraph (i) if the
25
R&D entity had used the asset; and
26
(b) the R&D entity is entitled under section 355-100 to
*
tax
27
offsets for one or more income years for deductions (the
28
R&D deductions
) under section 355-305 for the asset; and
29
(c) the R&D entity can deduct an amount (the
section 40-285
30
amount
) for the asset under section 40-285
(after applying
31
subsection 40-292(2)) for the present year.
32
Note:
This section applies in a modified way if you have deductions for the
33
asset under former section 73BA or 73BH of the
Income Tax
34
Assessment Act 1936
(see section 40-292 of the
Income Tax
35
(Transitional Provisions) Act 1997
).
36
(2) The amount is worked out as follows:
37
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Treasury Laws Amendment (Research and Development Tax Incentive)
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No. , 2019
Total R&D deductions
Section 40-285 amount
Total decline in value
ï‚´
1
where:
2
total decline in value
means the
*
cost of the asset less its
3
*
adjustable value.
4
355-467 R&D partnership assets only used for R&D activities
5
(1) The
*
R&D entity (the
partner
) has an amount under this section if:
6
(a) the partner is a partner in an
*
R&D partnership; and
7
(b) a
*
balancing adjustment event happens in the present year for
8
an asset
*
held by the
*
R&D partnership; and
9
(c) the R&D partnership cannot deduct, for the asset for an
10
income year, an amount under section 40-25, as that section
11
applies apart from:
12
(i) this Division; and
13
(ii) former section 73BC of the
Income Tax Assessment Act
14
1936
; and
15
(e) the partner is entitled under section 355-100 to
*
tax offsets
16
for one or more income years for deductions under
17
section 355-520 for the asset; and
18
(d) the partner is registered under section 27A of the
Industry
19
Research and Development Act 1986
for one or more
*
R&D
20
activities for the present year; and
21
(e) the partner can deduct an amount under
22
subsection 355-525(2) for the present year for the asset and
23
the balancing adjustment event.
24
(2) The amount is an amount equal to the amount mentioned in
25
paragraph (1)(e).
26
355-468 R&D partnership assets partially used for R&D activities
27
(1) The
*
R&D entity (the
partner
) has an amount under this section if:
28
(a) the partner is a partner in an
*
R&D partnership; and
29
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(b) a
*
balancing adjustment event happens in the present year for
1
a
*
depreciating asset
*
held by the R&D partnership and for
2
which:
3
(i) the R&D partnership can deduct, for an income year, an
4
amount under section 40-25, as that section applies
5
apart from Division 355 and former section 73BC of the
6
Income Tax Assessment Act 1936
; or
7
(ii) the R&D partnership could have deducted, for an
8
income year, an amount as described in subparagraph (i)
9
if it had used the asset; and
10
(c) one or more partners (including the partner) in the R&D
11
partnership are entitled under section 355-100 to
*
tax offsets
12
for one or more income years for deductions under
13
section 355-520 for the asset; and
14
(d) the R&D partnership can deduct an amount (the
15
section 40-285 amount
) for the asset under section 40-285
16
(after applying subsection 40-293(2)) for the present year.
17
Note:
This section applies in a modified way if the partners have deductions
18
for the asset under former section 73BA or 73BH of the
Income Tax
19
Assessment Act 1936
(see section 40-293 of the
Income Tax
20
(Transitional Provisions) Act 1997
).
21
(2) The amount is the partner's proportion of the amount worked out
22
as follows:
23
Total R&D deductions
Section 40-285 amount
Total decline in value
ï‚´
24
where:
25
total decline in value
means the
*
cost of the asset less its
26
*
adjustable value.
27
total R&D deductions
means the sum of each partner's deductions
28
mentioned in paragraph (1)(c) of this section.
29
355-475 Amount that can be deducted
30
(1) The
*
R&D entity can deduct, for the present year, the sum of the
31
following amounts for each offset year relating to the catch up
32
amount:
33
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
28
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
*
Adjusted offset
Starting offset
Deduction amount
R&D entity's corporate tax rate for the present year
ï€-
ï€-
1
where:
2
adjusted offset
means the
*
tax offset the R&D entity would have
3
received under section 355-100 for the offset year if the total
4
amount mentioned in subsection 355-100(1) for that tax offset
5
were increased by the portion of the catch up amount that is
6
attributable to the offset year.
7
deduction amount
means the portion of the catch up amount that is
8
attributable to the offset year, multiplied by the R&D entity's
9
*
corporate tax rate for the offset year.
10
starting offset
means the amount of the
*
tax offset the R&D entity
11
has received, or is entitled to receive, under section 355-100 for the
12
offset year.
13
Note:
A deduction under this subsection is not a notional deduction: see
14
subsection 355-105(2).
15
(2) However, if this section, or section 355-450, has previously applied
16
(whether in the present year or an earlier income year) in relation
17
to another catch up amount, or clawback amount, the
*
R&D entity
18
has that relates to the offset year, subsection (1) of this section
19
applies as if:
20
(a) the starting offset were the
*
tax offset the R&D entity would
21
have received under section 355-100 for the offset year if the
22
total amount mentioned in subsection 355-100(1) were:
23
(i) increased by the sum of the portions of any such other
24
catch up amounts that are attributable to the offset year;
25
and
26
(ii) decreased by the sum of the portions of any such other
27
clawback amounts that are attributable to the offset
28
year; and
29
(b) the reference to the "total amount" in the definition of
30
adjusted offset
were a reference to that amount as so
31
adjusted.
32
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
29
30 Subsection 355-525(2) (heading)
1
Repeal the heading.
2
31 At the end of subsection 355-525(2)
3
Add:
4
Note 1:
A deduction under this subsection is not a notional deduction (see
5
subsection 355-105(2)).
6
Note 2:
A deduction under this subsection will result in a catch up amount for
7
the partner (see section 355-467).
8
32 Subsections 355-525(3) to (7)
9
Repeal the subsections, substitute:
10
(3) If an amount would be included in the
*
R&D partnership's
11
assessable income for the event year under subsection 40-285(1)
12
for the asset and the event if Division 40 applied as described in
13
paragraph (1)(e), the partner's proportion of that amount is
14
included in the partner's assessable income for the event year.
15
Note:
Some or all of the amount included in the partner's assessable income
16
may result in a clawback amount for the partner (see section 355-448).
17
33 Section 355-530
18
Omit "For the purposes of sections 40-292 (balancing adjustments for
19
decline in value) and", substitute "For the purposes of section".
20
34 Subsection 355-715(2)
21
Omit ", 355-315, 355-520 or 355-525", substitute "or 355-520".
22
35 Subsection 355-715(2) (note 2)
23
Repeal the note, substitute:
24
Note 2:
Section 355-305 is about the decline in value of R&D assets and
25
section 355-520 is about the decline in value of R&D partnership
26
assets.
27
36 Section 355-720
28
Repeal the section.
29
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
30
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
37 Subsection 360-40(2)
1
Repeal the subsection, substitute:
2
(2) For the purposes of paragraph (1)(c), disregard any of the
3
following:
4
(a) an Accelerating Commercialisation Grant under the program
5
administered by the Commonwealth known as the
6
Entrepreneurs' Programme;
7
(b) an amount required to be included in the company's
8
assessable income under subsection 355-450(1).
9
38 Subsection 995-1(1) (definition of
feedstock revenue
)
10
Omit "section 355-470", substitute "subsection 355-445(4)".
11
Income Tax Rates Act 1986
12
39 Subsection 12(7)
13
Omit "sections 12A and 12B" (wherever occurring), substitute
14
"section 12A".
15
40 Sections 12B and 31
16
Repeal the sections.
17
Income Tax (Transitional Provisions) Act 1997
18
41 Subsection 40-292(3) (formula)
19
Repeal the formula (not including the definitions), substitute:
20
Old law
1.25 rate
1
deductions
Adjusted section
40-285 amount
Total decline
4
in value








ï‚´
ï‚´










21
42 After subsection 40-292(3)
22
Insert:
23
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
31
Application of Division 355
1
(3A) In applying Division 355 of the new Act in relation to the asset for
2
the income year, the R&D entity is taken to have:
3
(a) if the section 40-285 amount is an amount included in the
4
R&D entity's assessable income--a clawback amount under
5
section 355-447 of the new Act for the income year; or
6
(b) if the section 40-285 amount is a deduction--a catch up
7
amount under section 355-466 of the new Act for the income
8
year;
9
equal to the following amount:
10
Sum of new
law deductions
Adjusted section
40-285 amount
Total decline
in value
ï‚´
11
where:
12
adjusted section 40-285 amount
means:
13
(a) if the section 40-285 amount is a deduction--the amount of
14
the deduction; or
15
(b) if the section 40-285 amount is an amount included in the
16
R&D entity's assessable income--so much of the
17
section 40-285 amount as does not exceed the total decline in
18
value.
19
total decline in value
means the cost of the asset less its adjustable
20
value.
21
43 Subsection 40-293(3) (formula)
22
Repeal the formula (not including the definitions), substitute:
23
Old law
1.25 rate
1
deductions
Adjusted section
40-285 amount
Total decline
4
in value








ï‚´
ï‚´










24
44 After subsection 40-293(3)
25
Insert:
26
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
32
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Application of Division 355
1
(3A) In applying Division 355 of the new Act in relation to the asset for
2
the income year, an R&D entity (the
partner
) that is a partner in
3
the R&D partnership and is entitled to one or more new law
4
deductions for one or more income years for the asset, is taken to
5
have:
6
(a) if the section 40-285 amount is an amount included in the
7
R&D partnership's assessable income--a clawback amount
8
under section 355-449 of the new Act for the income year; or
9
(b) if the section 40-285 amount is a deduction--a catch up
10
amount under section 355-468 of the new Act for the income
11
year;
12
equal to the partner's proportion of the following amount:
13
Sum of new
law deductions
Adjusted section
40-285 amount
Total decline
in value
ï‚´
14
where:
15
adjusted section 40-285 amount
means:
16
(a) if the section 40-285 amount is a deduction--the amount of
17
the deduction; or
18
(b) if the section 40-285 amount is an amount included in the
19
R&D partnership's assessable income--so much of the
20
section 40-285 amount as does not exceed the total decline in
21
value.
22
sum of new law deductions
means the sum of each partner's new
23
law deductions mentioned in paragraph (2)(b) of this section.
24
total decline in value
means the cost of the asset less its adjustable
25
value.
26
45 Subsection 355-320(1) (note 1)
27
Omit "(the
new law deductions
)".
28
46 Subsection 355-320(3) (heading)
29
Repeal the heading, substitute:
30
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
33
Deduction
1
47 Subsection 355-320(3) (note)
2
Repeal the note.
3
48 Subsection 355-320(4) (formula)
4
Repeal the formula (not including the definitions), substitute:
5
Old law
1.25 rate
1
deductions
Adjusted section
40-285 amount
Total decline
4
in value








ï‚´
ï‚´










6
49 After subsection 355-320(4)
7
Insert:
8
Application of Division 355
9
(4A) In applying Division 355 of the new Act in relation to the asset for
10
the income year, if the R&D entity is entitled under
11
section 355-100 of the new Act to tax offsets for one or more
12
income years for deductions (the
new law deductions
) under
13
section 355-305 for the asset, the R&D entity is taken to have
14
(a) if an amount is taken to be included in the R&D entity's
15
assessable income for the event year as mentioned in
16
subsection (4) of this section--a clawback amount under
17
section 355-446 of the new Act for the income year equal to
18
the amount mentioned in subsection (4B) of this section; or
19
(b) if the R&D entity is taken to be able to deduct an amount as
20
mentioned in subsection (3) of this section--a catch up
21
amount under section 355-465 of the new Act for the income
22
year equal to the amount of that deduction.
23
(4B) The amount is the following:
24
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 2
R&D clawback and catch up amounts
34
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Sum of new
law deductions
Adjusted section
40-285 amount
Total decline
in value
ï‚´
1
where:
2
adjusted section 40-285 amount
means so much of the
3
section 40-285 amount as does not exceed the total decline in
4
value.
5
total decline in value
means the asset's cost, less its adjustable
6
value, worked out under Division 40 of the new Act as it applies as
7
described in subsection (2) of this section.
8
50 Subsection 355-325(1) (note 1)
9
Omit "(the
new law deductions
)".
10
51 Subsection 355-325(3) (heading)
11
Repeal the heading, substitute:
12
Deduction
13
52 Subsection 355-325(3) (note)
14
Repeal the note.
15
53 Subsection 355-325(4)
16
Repeal the formula (not including the definitions), substitute:
17
Old law
1.25 rate
1
deductions
Adjusted section
40-285 amount
Total decline
4
in value








ï‚´
ï‚´










18
54 Subsections 355-325(4A) to (4D)
19
Repeal the subsections, substitute:
20
Enhancing the integrity of the R&D Tax Incentive
Schedule 2
R&D clawback and catch up amounts
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
35
Application of Division 355
1
(4A) In applying Division 355 of the new Act in relation to the asset for
2
the income year, if one or more partners (including the partner) in
3
the R&D partnership is entitled under section 355-100 of the new
4
Act to tax offsets for one or more income years for deductions
5
under section 355-520 of that Act for the asset, the partner is taken
6
to have:
7
(a) if an amount is taken to be included in the R&D entity's
8
assessable income for the event year as mentioned in
9
subsection (4) of this section--a clawback amount under
10
section 355-448 of the new Act for the income year equal to
11
the amount mentioned in subsection (4B) of this section; or
12
(b) if the partner is taken to be able to deduct an amount as
13
mentioned in subsection (3) of this section--a catch up
14
amount under section 355-467 of the new Act for the income
15
year equal to the amount of that deduction.
16
(4B) The amount is an amount equal to the partner's proportion of the
17
following:
18
Sum of new
law deductions
Adjusted section
40-285 amount
Total decline
in value
ï‚´
19
where:
20
adjusted section 40-285 amount
means so much of the
21
section 40-285 amount as does not exceed the total decline in
22
value.
23
sum of new law deductions
means the sum of each partner's
24
deductions under section 355-520 of the new Act mentioned in
25
subsection (4A) of this section.
26
total decline in value
means the asset's cost, less its adjustable
27
value, worked out under Division 40 of the new Act as it applies as
28
described in subsection (2) of this section.
29
55 Section 355-720
30
Repeal the section.
31
Schedule 2
Enhancing the integrity of the R&D Tax Incentive
Part 3
Application of amendments
36
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Part 3--Application of amendments
1
56 Application of amendments
2
(1)
The amendments made by Part 1 of this Schedule apply on or after
3
1 July 2019 in connection with a scheme, whether or not the scheme
4
was entered into, or was commenced to be carried out, before that day.
5
(2)
Despite subitem (1), the amendments made by Part 1 of this Schedule
6
do not apply in relation to tax benefits that a taxpayer derives before
7
that day.
8
(3)
The amendments made by Part 2 of this Schedule apply in relation to
9
assessments for income years commencing on or after 1 July 2019.
10
Improving the administration of the R&D Tax Incentive
Schedule 3
Reporting of information about research and development tax offset
Part 1
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
37
Schedule 3--Improving the administration of
1
the R&D Tax Incentive
2
Part 1--Reporting of information about research and
3
development tax offset
4
Taxation Administration Act 1953
5
1 At the end of Part IA
6
Add:
7
3H Reporting of information about research and development tax
8
offset
9
(1) This section applies to an R&D entity in relation to an income year
10
if, according to information the entity gave the Commissioner, the
11
entity is entitled under Division 355 of the
Income Tax Assessment
12
Act 1997
to a tax offset for amounts it can deduct under that
13
Division for the income year.
14
(2) The Commissioner must, as soon as practicable after the second
15
30 June after the financial year corresponding to the income year,
16
make publicly available the information mentioned in
17
subsection (3).
18
(3) The information is as follows:
19
(a) the entity's name;
20
(b) the entity's ABN or, if the first information the entity gave
21
the Commissioner indicating the entity's entitlement to the
22
tax offset does not include the entity's ABN but does include
23
the entity's ACN (within the meaning of the
Corporations
24
Act 2001
), the entity's ACN;
25
(c) if, according to the first information the entity gave the
26
Commissioner indicating the entity's entitlement to the tax
27
offset, the total described in paragraph (4)(a) exceeds the
28
total described in paragraph (4)(b)--the excess.
29
(4) For the purposes of paragraph (3)(c), the totals are as follows:
30
Schedule 3
Improving the administration of the R&D Tax Incentive
Part 1
Reporting of information about research and development tax offset
38
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
(a) the total of what the entity can deduct for the income year as
1
described in subsection (1) of this section;
2
(b) the total of the amounts the entity has under section 355-445
3
of the
Income Tax Assessment Act 1997
for the income year.
4
(5) Subsection (6) applies if:
5
(a) the entity gives the Commissioner a notice in writing that the
6
information mentioned in paragraph (3)(c) contains an error;
7
and
8
(b) the notice contains information that corrects the error.
9
(6) The Commissioner may at any time make the information
10
mentioned in paragraph (5)(b) publicly available, in accordance
11
with subsection (2), in order to correct the error.
12
(7) To avoid doubt, if the Commissioner considers that information
13
made publicly available under subsection (2) fails to reflect all of
14
the information required to be made publicly available under that
15
subsection, the Commissioner may at any time make publicly
16
available other information in order to remedy the failure.
17
(8) An expression used in this section and in the
Income Tax
18
Assessment Act 1997
has the same meaning in this section as in
19
that Act.
20
2 Subsection 355-50(1) in Schedule 1 (note 2)
21
Omit "and 3E", substitute ", 3E and 3H".
22
3 Application
23
Section 3H of the
Taxation Administration Act 1953
applies to income
24
years that start on or after 1 July 2019.
25
Improving the administration of the R&D Tax Incentive
Schedule 3
Findings about clinical trials and determinations about performance of Board's
functions
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
39
Part 2--Findings about clinical trials and
1
determinations about performance of
2
Board's functions
3
Industry Research and Development Act 1986
4
4 Subsection 4(1)
5
Insert:
6
clinical trial
has the same meaning as in the
Income Tax
7
Assessment Act 1997
.
8
5 At the end of section 26A
9
Add:
10
•
The Board may make general determinations about how it will
11
exercise its powers, and perform its functions and duties,
12
under this Part. The Board must act in accordance with such a
13
determination.
14
6 Subsection 27A(1)
15
Omit "either or both", substitute "one or more".
16
7 After paragraph 27A(1)(b)
17
Insert:
18
; (c) one or more specified activities, for which the entity is or is
19
to be registered under another paragraph of this subsection,
20
as activities that formed part of a clinical trial conducted
21
during the income year.
22
8 After paragraph 27B(1)(d)
23
Insert:
24
; (e) that all or part of an activity mentioned in the application
25
formed part of a clinical trial conducted during the income
26
year;
27
Schedule 3
Improving the administration of the R&D Tax Incentive
Part 2
Findings about clinical trials and determinations about performance of Board's
functions
40
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
(f) that all or part of an activity mentioned in the application did
1
not form part of a clinical trial conducted during the income
2
year.
3
9 Subsection 27B(1) (note 2)
4
Repeal the note, substitute:
5
Note 2:
The Board could make a finding under paragraph 27B(1)(b) if, for
6
example, the Board has insufficient information to make a finding
7
under paragraph 27B(1)(a). Similarly, the Board could:
8
(a) make a finding under paragraph 27B(1)(d) if it has insufficient
9
information to make a finding under paragraph 27B(1)(c); or
10
(b) make a finding under paragraph 27B(1)(f) if it has insufficient
11
information to make a finding under paragraph 27B(1)(e).
12
10 Subsection 27E(2) (note 3)
13
Omit "or (d)", substitute ", (d) or (f)".
14
11 Subsection 27H(2) (note 3)
15
Omit "or (d)", substitute ", (d) or (f)".
16
12 After paragraph 27J(1)(d)
17
Insert:
18
; (e) that all or part of a registered activity formed part of a
19
clinical trial conducted during the registration year;
20
(f) that all or part of a registered activity did not form part of a
21
clinical trial conducted during the registration year.
22
13 Subsection 27J(1) (note 2)
23
Repeal the note, substitute:
24
Note 2:
The Board could make a finding under paragraph 27J(1)(b) if, for
25
example, the Board has insufficient information to make a finding
26
under paragraph 27J(1)(a). Similarly, the Board could:
27
(a) make a finding under paragraph 27J(1)(d) if it has insufficient
28
information to make a finding under paragraph 27J(1)(c); or
29
(b) make a finding under paragraph 27J(1)(f) if it has insufficient
30
information to make a finding under paragraph 27J(1)(e).
31
14 Section 28
32
Omit "an R&D activity.", substitute "an R&D activity or forms part of a
33
clinical trial.".
34
Improving the administration of the R&D Tax Incentive
Schedule 3
Findings about clinical trials and determinations about performance of Board's
functions
Part 2
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
41
15 After paragraph 28A(1)(c)
1
Insert:
2
(ca) find that all or part of the activity forms part of a clinical
3
trial;
4
(cb) find that all or part of the activity does not form part of a
5
clinical trial;
6
16 After Division 6 of Part III
7
Insert:
8
Division 6A--Determinations about Board's powers,
9
functions and duties under this Part
10
31C Simplified outline
11
•
The Board may make general determinations about the
12
circumstances or way in which it will exercise its powers, or
13
perform its functions or duties, under this Part.
14
•
The Board must act in accordance with such a determination.
15
•
A determination cannot override the decision-making
16
principles.
17
31D Board may make a determination about its powers, functions
18
and duties
19
(1) On its own initiative, the Board may, by notifiable instrument,
20
make a determination about the circumstances or way in which the
21
Board will exercise any of its powers, or perform any of its
22
functions or duties, under this Part (except this Division).
23
(2) The determination must not relate to the exercise of powers, or the
24
performance of functions or duties, in a particular case or in
25
relation to a particular entity.
26
Schedule 3
Improving the administration of the R&D Tax Incentive
Part 2
Findings about clinical trials and determinations about performance of Board's
functions
42
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
(3) The Board must exercise its powers, and perform its functions and
1
duties, under this Part (except section 30D and this Division) in
2
accordance with the determination.
3
Note:
Section 30D is about the Board reviewing a reviewable decision.
4
(4) The determination has no effect to the extent of any inconsistency
5
with this Act, the regulations or the decision-making principles.
6
Note:
The Board must revoke or amend the determination to remove any
7
inconsistency: see section 31E.
8
31E When Board must amend or revoke a determination
9
(1) This section applies to a determination made under section 31D if:
10
(a) as a result of reviewing under section 30D a reviewable
11
decision that was made in accordance with the determination
12
because of section 31D, the Board is satisfied that the
13
determination is incorrect; or
14
(b) the determination is inconsistent with:
15
(i) a decision of a court; or
16
(ii) a decision of the Administrative Appeals Tribunal on
17
review of an internal review decision relating to a
18
reviewable decision that was made in accordance with
19
the determination because of section 31D; or
20
(iii) this Act, the regulations or the decision-making
21
principles.
22
(2) The Board must, by notifiable instrument, revoke the determination
23
or amend it so it is no longer incorrect or inconsistent.
24
(3) This section does not limit the application of subsection 33(3) of
25
the
Acts Interpretation Act 1901
in relation to the power to make a
26
determination under section 31D of this Act.
27
Note:
Subsection 33(3) of the
Acts Interpretation Act 1901
provides that a
28
power to make an instrument includes the power to revoke or vary the
29
instrument.
30
17 Application
31
The amendments made by this Part apply in relation to the exercise of
32
powers, and the performance of functions and duties, by the Board after
33
the commencement of this Part.
34
Improving the administration of the R&D Tax Incentive
Schedule 3
Delegation by Board and committees
Part 3
No. , 2019
Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
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Part 3--Delegation by Board and committees
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Industry Research and Development Act 1986
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18 Paragraph 21(1)(e)
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Omit "who is an SES employee, or acting SES employee".
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19 Subsection 22A(1)
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Omit "who is an SES employee, or acting SES employee,".
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Schedule 3
Improving the administration of the R&D Tax Incentive
Part 4
Extensions of time
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Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019
No. , 2019
Part 4--Extensions of time
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Industry Research and Development Decision-making
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Principles 2011
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20 At the end of section 3.2
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Add:
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(3) However, the total of further periods allowed under this Part for a
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particular thing to be given by an interested person must not
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exceed 3 months. This subsection has effect despite section 3.4.
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(4) Subsection (3) does not apply if the thing to be given deals with a
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matter that corresponds to the subject of a decision that:
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(a) relates to the interested person; and
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(b) has not been finalised;
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but is not the subject of that decision.
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Example: Subsection (3) does not apply to an application to register activities of
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an R&D entity under section 27A of the Act for an income year if:
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(a) the entity has previously applied for registration, or for variation
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of the entity's registration, for corresponding activities for an
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earlier income year; and
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(b) a decision on the previous application either has not been made
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or is subject to review under Division 5 of Part III of the Act.
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