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Second exposure draft of R&D tax incentive legislation released

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As reported by R&D Info, a second exposure draft of the legislation for the new R&D tax incentive has been released by the Federal Government.

The modifications to the legislation include a revised definition of core R&D that uses clearer language and dispenses with a range of overlapping tests.  The Government has also decided not to extend the exclusions list to supporting activities and to narrow the scope of activities to which the new dominant purpose test will apply.

The second exposure draft also takes a new approach to software R&D.  Generally, software R&D will be subject to the same rules as all other kinds of R&D, but will be subject to a more targeted exclusion for certain in-house software.

The Government still expects the new R&D tax incentive to start from 1 July 2010.  Legislation for the new scheme will be introduced in the next sittings of Parliament.

Submissions on revised tax incentive legislation are required by Monday, 19 April 2010.  The exposure draft legislation and explanatory materials can be found on the Treasury website www.treasury.gov.au