The Department of Industry, Science and Resources is responsible for the majority of federally supported science and technology related industry development programs. The Department includes the Innovation and Science Division, the Australian Geological Survey Organisation, IP Australia and the Office of AusIndustry, including the Industry Research and Development Board (IRDB) programs. The Innovation and Science Division, comprising the Science and Technology Policy Branch, the International Science and Technology Policy Branch, the Innovation Policy Branch and the Science and Technology Advisory Team, is responsible for science and technology strategy, policy, analysis and awareness. It is responsible, inter alia, for the preparation of the annual Science and Technology Budget Statement.
The Department, through AusIndustry, administers the Tax Concession for Research and Development scheme, the Strategic Assistance for Research and Development (START) Program and the Cooperative Research Centres Program. The scientific and technological bodies of the portfolio include the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the Australian Nuclear Science and Technology Organisation and the Australian Institute of Marine Science.
R&D Tax Concession Program
The tax concession for R&D, which commenced from July 1985, is the focus of one of the major programs in the Commonwealth Government's package of measures to encourage R&D in Australia.
The concession allows companies incorporated in Australia, public trading trusts and partnerships of eligible companies, to deduct up to 125% of eligible expenditure on R&D activities when lodging their corporate tax returns.
To attract the tax concession deduction, annual eligible R&D expenditure must exceed $20,000. Where R&D is contracted to either an approved Registered Research Agency or a Cooperative Research Centre this expenditure threshold is waived.
The R&D tax concession has been enhanced as a result of the Commonwealth Government's 'Backing Australia's Ability' innovation statement. The new R&D tax concession incorporates the following elements:
- The 175% premium R&D tax concession which will be provided in addition to the 125% R&D tax concession, and rewards increases in R&D effort. It allows companies, in their corporate tax returns, to deduct up to 175% of the eligible expenditure incurred on additional R&D activities. To be eligible, companies must have increased their R&D intensity (R&D expenditure divided by turnover) during the year above a base level, which will be determined by their claim histories over the preceding three tax years.
- The R&D tax rebate which allows small companies, particularly tax loss companies, to obtain the cash equivalent of the 125% R&D tax concession and, where eligible, to claim the 175% premium R&D tax concession when their tax liabilities are assessed.
- Changes to the treatment of R&D plant which will allow users of the program to claim the full value of the plant or tangible items consumed in or associated with R&D activities. This means that companies which use an item of plant for only part of an income year for R&D will now be able to claim the concession for that portion of use.
Strategic Assistance for Research and Development Program
The R&D START Program provides grants and concessional loans to support research, development and commercialisation by Australian firms. Grants of up to $15m are available, although they typically range between $50,000 and $5m. Assistance is provided on a competitive basis to companies incorporated in Australia. The program aims to:
- Changes to the definition of R&D so that, for claims to be eligible, R&D activities must involve both 'innovation' and 'high levels of technical risk'.
- increase the number of private sector R&D projects undertaken with high commercial potential;
- foster innovation in Australian businesses;
- increase commercialisation of the outcomes of R&D projects; and
The program comprises:
- foster collaborative R&D and related activities, both within industry and between industry and research institutions.
- Core Start, for companies with turnover under $50m a year;
- Start Plus, for companies with turnover over $50m a year;
- Start Premium, providing further assistance for high quality projects;
- Start Graduate, to help companies with turnover under $50m employ a graduate on a R&D project; and
- Concessional Loans, for small companies with less than 100 employees.