Australia’s R&D Tax Credit to Start in July

June 17, 2011 Taxation in Australia

research and development tax creditAustralia will soon see a new research and development tax credit, after a sudden shift of support for the proposal in the Australian Parliament.

Earlier this week the Green Party of Australia pledged political and voting support to assist the ruling Labour Party in implementing its policy for a research and development tax credit. With the shift in political backing, on June 15th the Labour Party came forward to announce that the tax credit is now expected to come into effect on July 1st 2011.

The upcoming tax change was revealed in a joint statement by the Australian Treasurer Wayne Swan and Innovation Minister Kim Carr. The Ministers said that the research and development incentive will offer a 45 percent refundable tax credit to companies with turnovers of less than AUD 20 million per year. Enterprises with larger turnovers will be eligible for a non-refundable credit of 40 percent. In an effort to further improve the cash flows of firms involved in innovative research projects across Australia, in January 2014 the system will be expanded with eligible business set to receive their credits as quarterly payments.

The research and development tax credit is expected to inject an estimated AUD 1.8 billion into the cash flows of high-tech firms in Australia, especially in the green manufacturing, ICT and bio-technology sectors. The Ministers claimed that the innovations that will be developed from the research will increase Australia’s national productivity and incomes of Australian taxpayers. In order to ensure that the credit is effectively benefiting the Australian economy and community, the government will establish a new advisory group, which will monitor the implementation of the research and development tax credit.

Photo by CIAT International Center for Tropical Agriculture