22nd Nov 2010, 4:44 PM – Representatives Tax Laws Amendment (Research and Development) Bill 2010 - Second Reading - Reconsider approach taken by bill

The majority voted in favour of a motion that the original motion remain unchanged. The original motion was that the bill be now read a second time.(Read more about the stages that a bill must pass through here. )

This division took place in response to Liberal MP Sophie Mirabella's motion, which was:

That all the words after “That” be omitted with a view to substituting the following words: “the House:

(1) reaffirms its commitment to providing continued high levels of support for Australian businesses that invest in research and development (R&D) activities;

(2) notes that this bill weakens the current system, and recognises that the bill has significant limitations in relation to the following:

(a) the proposed start date of 1 July 2010;

(b) the establishment of a ‘dominant purpose’ test;

(c) the application of feedstock provisions to a wide range of activities and results;

(d) the reduction of support for R&D in the building industry;

(e) the disqualification of many small and medium-sized businesses from support because of new rules in respect of their ownership structures and turnover;

(f) the requirement for costs to be documented and attributed to ‘core’ and ‘supporting’ activities;

(g) the new provisions relating to third-party investors in firms’ R&D; and

(h) the proposed application of new rules relating to the disposal of R&D results to actions taken prior to the commencement of this legislation; and

(3) urges the Government to release full modelling demonstrating the impact of its proposed changes, and reconsider its approach in order to ensure that encouragement of business R&D activity is not substantially reduced.”

One member, Nationals MP Tony Crook, rebelled and crossed the floor to vote 'aye' with the Government.(Read more about what it means to cross the floor in our FAQ Section. )

Background to the bill

The bill was introduced to establish the framework for a new research and development (R&D) tax incentive in the Income Tax Assessment Act 1997 and to repeal the provisions of the existing incentive currently contained in the Income Tax Assessment Act 1936.(Learn more about the bill in its bills digest. For more, including its explanatory memorandum, see here.)

References