• p. 02 9810 7211

MJA Updates

R&D Tax Rate Cut Bill Stalled

June 30, 2015 Kris Gale

It now seems unlikely that the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015 will be debated in the Senate prior to Parliament’s winter break. The Bill does not appear on today’s order of business which is the last sitting day before the adjournment. Should it not appear today, the earliest the Bill can be debated is 10 August when Parliament reconvenes. The Bill seeks to introduce an across-the-board 1.5% cut to the R&D Tax Offset rates, reducing the rates to 43.5% for companies who have an annual group turnover of between $2 million and $20 million and 38.5% for companies with an annual group turnover of greater than $20 million. The Bill would make these changes retrospective to 1 July 2014.

The Bill was previously introduced to align the R&D Tax Incentive rates with a proposed 1.5% decrease in the corporate tax rate from 30% to 28.5% and was defeated in the Senate earlier this year. The Government is now arguing that the drops in the permanent rates of assistance are necessary for the sole reason of budget repair, saving $810 million in the forward estimates over the next four years. As it happens, it was announced in the 2015/16 Budget that companies with an annual aggregated turnover of $2 million or less are to receive a 1.5% cut in the corporate tax rate so the permanent difference to this group of taxpayers will remain at 15 cents in the dollar should the Bill be passed.

MJA is closely monitoring the progress of the draft legislation. It is significant that companies such as CSL, Australia’s largest biotechnology manufacturer, and food company, Simplot, are openly speaking out against the proposal.

At this stage, Labor and the Greens have indicated that they will be opposing the Bill. Spokesmen for Labor and the Greens have both expressed concerns that the Bill will stifle innovation and stunt the generation of highly skilled jobs in the economy. This leaves the balance of power in the hands of the eight crossbenchers in the Senate.

We will update you on all developments as they occur.

Should you wish to discuss this matter further, please do not hesitate to contact Kris Gale directly on (02) 9810 7211 or email kris.gale@mjassociates.com.au

Keep informed

MJA updates keep you informed on how government decisions will effect your business. This is a must if you want to know the latest on business and company insights without having to read and decipher complicated law and tax manuscripts.

* indicates required