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5.1 This chapter focuses on incentives to encourage investment in R&D and also on possible impediments to such investment, which arise from aspects of taxation and the difficulties of accessing venture capital. Changes to public policy in these areas in recent years are less directly attributable to corporatisation, privatisation, outsourcing and competition policy than the matters discussed in previous chapters. However, they are matters which were of considerable importance to those who provided evidence during the course of the inquiry, and significantly affect the amount and nature of R&D being carried out in Australia and the commercial relevance of the R&D effort. The R&D tax concession 5.2 The R&D tax concession was introduced in 1985, entitling companies to claim 150 percent of the cost of their R&D as an expense against taxable income. The concession was introduced for a period of six years, but was then extended until June 1993, after which it was to be reduced to 125 percent. In the 1992-93 budget it was announced that the concession would be retained indefinitely at 150 percent. However, the concession was reduced to 125 percent in the 1996-1997 budget. 5.3 To claim the concession, companies must register with the Industry Research and Development (IR&D) Board. 293 Eligible expenditure includes salaries, wages and overhead costs directly related to a company’s R&D activities, contract expenditure, and capital expenditure on R&D plant including pilot plant. Special provisions apply to other costs such as core technology, feedstock and interest. 294 The official definition of eligible R&D sets out a series of interpretations and a list of excluded activities. 295 5.4 Companies can conduct eligible R&D activities in-house, or contract them to other companies or approved Registered Research Agencies (RRAs). A minimum expenditure threshold of $20 000 applies to companies 293 The role of the IR&D Board is to “increase the level and commercial success of industry research and development undertaken in Australia”. The Board’s membership includes representatives from the private sector. The office of AusIndustry, a divisio

Year: 2011
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