R&D Quarterly refunds

Analysis

Quarterly R&D refunds

To be or not to be?

The changing fortunes of the oft-mentioned quarterly refundable R&D tax offsets have left taxpayers confused as to the status of the proposed legislation. This article sets out the path that the proposed provisions have taken together with the timeframes in question.

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On 15 June 2011, the former government announced changes to first set the scene for the introduction of R&D tax offset refunds on a quarterly basis with effect from 1 January 2014 for those entities entitled to the refundable R&D tax offset. The proposal was seen as a vital cash-flow advantage for entities in start-up phases. 

Subsequently, two rounds of consultation were completed in the form of an August 2012 consultation paper and Exposure Draft legislation released in April 2013. A Bill containing the draft provisions was introduced into Parliament on 26 June 2013 but lapsed on 5 August 2013 when Parliament was prorogued on the calling of the federal election.

 On 14 December 2013, as part of the new government’s consultation on the backlog of 92 announced but unlegislated tax and superannuation measures, it was announced that the R&D tax offset quarterly credits was one of the measures that would not proceed. 

However on 15 July 2014, the Financial System Inquiry (Murray) made a recommendation that the issue of quarterly R&D tax credits should be considered as part of the Tax White Paper process unless they were already under active government consideration. 

In the most recent development, the Australian Greens have moved an amendment in the Senate to reintroduce the quarterly credit legislation into the Tax Laws Amendment (Research and Development) Bill 2013 which currently proposes to deny access to the R&D tax offset from 1 July 2013 to large groups with aggregate Australian assessable income in excess of $20bn.

The Senate sits again from late October and it is to be hoped that the issue of R&D quarterly credits will be debated in the near future to give some certainty to the Australian taxpayers who are currently eligible for the refundable R&D tax incentive.  

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