Proposed Tax Law Amendments

The Federal Government has introduced a Bill into Parliament. The amendments contained in the Bill include:

• increasing the aggregated research and development (R&D) expenditure cap from $1 million to $2 million for eligibility to the R&D tax offset; and
• making minor technical corrections to the taxation laws, including the small business CGT concessions, and FBT on donations.

R&D offset

Currently, an eligible company can claim a refundable R&D tax offset for its R&D expenditure, subject to satisfying certain conditions.

One of the conditions is that the aggregated R&D expenditure of the company and its affiliates does not exceed $1 million. The lifting of the expenditure cap to $2 million provides an incentive for companies to increase their R&D activities.

Minor technical changes

The proposed amendments include:

• ensuring a pre-CGT asset that is deemed a post-CGT asset due to the operation of the CGT provisions of Div 149 of ITAA 1997 can be distributed tax-free under the small business CGT concessions, subject to certain requirements being met; and
• ensuring donations made through salary sacrifice arrangements do not result in an FBT liability.