House of Representatives

Tax Laws Amendment (Research and Development) Bill 2013

Second Reading Speech

Mr Ciobo (Parliamentary Secretary to the Treasurer)

I move:

That this bill be now read a second time.

Mr Deputy Speaker, I take this opportunity to congratulate you on your ascension.

This bill reintroduces a measure that was introduced by the previous government but lapsed when the last parliament was prorogued.

The measure targets access to the research and development (R&D) tax incentive to the small and medium sized entities that are more responsive to increasing their R&D spending as a result of government incentives. In other words, it reduces waste by ensuring that government incentives for R&D are applied in a more effective way.

It does that by limiting the R&D tax incentive to companies with aggregated assessable income of less than $20 billion. Companies that have aggregated assessable incomes of $20 billion or more will apply the normal income tax rules to their expenditure on R&D activities.

The measure will apply to income years starting on or after 1 July 2013 and is estimated to produce a gain to revenue of $1.1 billion over the forward estimates period.

The bill also makes a consequential amendment to the Industry Research and Development Act 1986 to ensure that very large companies are still able to claim their overseas R&D activities for income years in which they fall below the $20 billion threshold. This allows the tests for eligibility of R&D activities conducted overseas to continue to operate as intended.

Full details of the measure are contained in the explanatory memorandum. I commend the bill to the House.

Debate adjourned.