Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)OUTLINE
This Bill amends the Industry Research and Development Act 1986 ( IR & D Act ) and contains provisions to streamline the administration of the Research and Development Tax Concession scheme, with the aim of reducing compliance costs for companies. The Bill also addresses some rigidities in the procedures for company registration with the intent of allowing the Industry Research and Development Board (the Board) increased discretion in its dealings with applicants, without relaxing the restrictions on retrospective access to tax deductions.
The opportunity is taken at the same time to address a range of procedural and administrative issues that have become apparent in the operation of the scheme.
The key provisions of the Bill will:
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- allow companies a longer period for the lodgement of registration applications;
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- allow the Board the flexibility to require different levels of information from different classes of applicant, which would allow it to reduce compliance costs for specific classes of companies, for example small claimants;
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- allow the Board a limited discretion to accept late applications and to correct minor errors in registrations. In particular, the Bill directs the Board to reconsider six specific cases where the past lack of any such discretion has prevented their applications for registration from being validly considered by the Board; and
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- improve service to companies applying for certification of offshore research and development by making the effective date for certificates the date on which the application was received, rather than the date of Board decision.
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- In addition, the Bill contains provisions which:
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- protect the integrity of the Research and Development Tax Concession scheme by clarifying the Boards powers regarding the exploitation of the results of research and development activities and overseas expenditure on research and development; and
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- effect minor administrative improvements with respect to communications, Board and committee appointments, recruitment of consultants, and the Registered Research Agency scheme.
FINANCIAL IMPACT STATEMENT
This Bill provides for the Board to consider six registration applications lodged by eligible companies with the Australian Taxation Office on time, but not received by the Board until after the time allowed for making an application for registration had ended.
If, upon consideration of these applications, the Board were to decide to register all of these companies, there would be a total cost to revenue of approximately $80,000.
NOTES ON CLAUSES
This clause provides for the Act to be cited as the Industry Research and Development Amendment Act 1998 .
The provisions of the Bill will commence on the date of Royal Assent.
Each Act specified in the Schedule(s) is amended as set out in the Schedule(s).
Clause 4 - Treatment of certain applications lodged with the Australian Taxation Office
This clause provides for the Board to be able to consider six companies for registration in respect of applications which were:
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- lodged with the Australian Taxation Office (instead of the Board) within the period allowed for making an application to the Board, and
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- not received by the Board until that period had expired.
While the companies listed were mistaken in lodging their applications with the Australian Taxation Office instead of with the Board, it is arguable that this mistake was not unreasonable given the joint administration of the Research and Development Tax Concession scheme by the Board and the Australian Taxation Office.
Clause 5 - Effect of amendments relating to members of the Industry Research and Development Board and its committees
Items 1, 2, 3, 4 and 5 of Schedule 1 relating to the appointment of members of the Board and committees do not affect such an appointment in force immediately before commencement.