The transcript of the hearing on 21 February 2014 of the Senate Economics Legislation Committee’s inquiry into the Tax Laws Amendment (Research and Development) Bill 2013 has been released. The inquiry was referred to the Committee by the Senate on 5 December 2013 for report by 17 March 2014. The Committee said that, to date, it had received 20 submissions, which are available on its website. The Bill proposes to amends the ITAA 1997 to deny access to the R&D tax incentive for companies with aggregated assessable income of $20bn or more for an income year. It would also amend and Industry Research and Development Act 1986 to provide that the conditions for eligibility of R&D activities conducted outside Australia continue to operate as intended.

The Committee heard from a range of interested parties including the ATO, Caltex Australia, Deloitte, Ernst & Young, and Treasury. Deloitte said it was disappointed the Government had decided to proceed with the former Government’s proposal to deny access to Australian R&D tax incentives for large companies with assessable income exceeding $20bn for years of income commencing on or after 1 July 2013. The firm suggested that the timing of the introduction of this amendment was poor given the lack of substantive industry consultation and the commitment given to review the Australian innovation policy landscape in 2014. Ernst & Young considered the proposed changes would limit the incentives for larger companies to perform R&D in Australia and they were also unexpected. It said the $20bn figure was arbitrary with little analysis provided to support it.

[LTN 36, 24/2/14]