BILLS DIGEST NO. 41, 2014–15              24 October 2014

Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014

Bernard Pulle, Tony Kryger and Daniel Weight
Economics Section

Date introduced: 4 September 2014

House:  House of Representatives

Portfolio: Treasury

Commencement:  The Act, other than Schedules 1 and 2, commences on the day it receives the Royal Assent.

Schedules 1 and 2 commence on the day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

Purpose of the Bill

The purpose of each of the four Schedules is briefly outlined below:

•       Schedule 1 amends the Income Tax Assessment Act 1997 (ITAA 1997) to abolish the mature age worker tax offset (MAWTO) and makes consequential amendments to the Taxation Administration Act 1953 (TAA 1953)[1]

•       Schedule 2 amends the ITAA 1997 to abolish the seafarer tax offset

•       Schedule 3 amends the ITAA 1997 to reduce the rates of the tax offset under the research and development (R&D) incentive scheme by 1.5 per cent and

•       Schedule 4 amends the ITAA 1997 to include the Australian Schools Plus Ltd, the East African Fund and The Minderoo Foundation Trust in the list of specifically listed deductible gift recipients (DGRs).

Committee consideration

The Bill was referred to the Senate Economics Legislation Committee on 24 September 2014.[2] That Committee is due to report by 28 October 2014. Further information on that inquiry is available here.[3]

The submissions generally dealt with the amendments proposed in Schedules 2 and 3. The views expressed in selected submissions are set out below.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible as it does not give rise to any human rights issues.[4]

The Parliamentary Joint Committee on Human Rights concurs with the Government’s assessment.[5]

Schedule 1—Abolishing the mature age worker tax offset

Background

A tax offset operates to reduce the amount of income tax payable, after calculating the basic income tax liability.

The mature age worker tax offset (MAWTO) has been available since 2004–05. It was introduced to provide an incentive to mature age workers to stay in the workforce.[6]

Initially, to be eligible for the MAWTO a worker had to be aged 55 years or more at the end of the year in which they lodged their income tax return. Eligibility for the offset was later scaled back by the Rudd Government. From 1 July 2012 it was confined to individuals born before 1 July 1957. In other words, only individuals aged 55 years or over prior to 1 July 2012 remained eligible for the offset.[7]

The MAWTO is available for the first dollar of net income at the rate of five cents per dollar. For instance, the offset for someone earning $1 per year would be five cents; for someone earning $5,000 it would be $250 and for a person earning $10,000, it would be $500. This is the maximum offset that a worker can gain under the scheme and is available for incomes of between $10,000 and $53,000 after which it fades out at the same five cents in the dollar rate. Above $63,000 there is no offset offered.[8]

The Government argues that the MAWTO does not provide a significant incentive for older Australians to work. Consequently, the Government is seeking to abolish the MAWTO. However, it is introducing a new wage subsidy for older job seekers called the Restart programme. Under this programme a payment of up to $10,000 will be available to employers who hire a mature age job seeker aged 50 years or over.[9] Payments will be made in instalments of $3,000 after six months, $3,000 after 12 months, $2,000 after 18 months and $2,000 after 24 months of employment.[10] This measure is not implemented by this Bill.

Financial implications

The Explanatory Memorandum states that the abolition of the MAWTO is expected to result in a gain to revenue over the forward estimates period of $760 million comprising:[11]

2014–15

2015–16

2016–17

2017–18

-

$290m

$255m

$215m

Key issues

The Government has argued that the MAWTO is a complicated tax that is not well understood and is not a cost effective way of encouraging older people to work. This is because the maximum offset of $500 is generally not a sufficient incentive for older workers to enter the workforce. Moreover, many older workers who benefit from the MAWTO are likely to remain in the workforce regardless of whether or not they receive the offset.[12]

Workers in receipt of the MAWTO

In 2004–05, when the MAWTO was introduced, 1,115,660 workers received the offset. The number increased significantly in 2005–06, up by almost 100,000 to 1,212,415. Increases in subsequent years, however, were more modest, and between 2010–11 and 2011–12 the number actually fell—down by 338,245 or 24 per cent. (Table 1)

Workers in receipt of the offset make up a significant proportion of the mature age workforce. In 2004–05 that proportion was 83.4 per cent, rising to 84.1 per cent the following year. However, in subsequent years the proportion of the mature age workforce receiving the offset fell, falling sharply in 2011–12 to 53.6 per cent.

Table 1 – Workers in receipt of the MAWTO

Year

MAWTO (‘000)

Labour force aged 55+ years (‘000)

MAWTO as % labour force aged 55+

2004–05

1,115.7

1,338.0

83.4

2005–06

1,212.4

1,441.3

84.1

2006–07

1,248.2

1,542.2

80.9

2007–08

1,283.2

1,622.4

79.1

2008–09

1,341.2

1,729.7

77.5

2009–10

1,403.8

1,836.8

76.4

2010–11

1,410.5

1,932.9

73.0

2011–12

1,072.2

2,000.6

53.6

Sources: Australian Taxation Office (ATO), Taxation statistics 2011–12 detailed tables, ATO; Australian Bureau of Statistics (ABS), Labour force, Australia, cat. no. 6291.0.55.001, ABS, Canberra, 18 September 2014, accessed 30 September 2014.

It is difficult therefore to argue that MAWTO has encouraged mature age workers to remain in the workforce as workers in receipt of the MAWTO have not even maintained their share of the mature age workforce.

Labour force participation rate for mature age workers

Between 2003–04 and 2004–05, when the MAWTO was introduced, the number of persons in the mature age labour force (persons aged 55+ years) increased from 1,237,000 to 1,338,000, an increase of 8.2 per cent. This is the largest annual percentage rise since at least 1979–80.

While it may be tempting to attribute this rise to the introduction of the MAWTO, a few things need to be borne in mind. First, the number of persons in the total labour force (persons aged 15+ years) rose by 2.2 per cent between 2003–04 and 2004–05, which was the largest percentage rise for 15 years. Hence it is reasonable to assume that much of the increase in the mature age workforce at this time was due to a general rising tide of labour force participation. Second, the number of mature age workers in the labour force rose by 7.9 per cent (the second highest percentage increase) between 2000–01 and 2001–02 when there was no MAWTO in place. The large increase in the labour force participation rate when the MAWTO was introduced was therefore not unprecedented. (Chart 1)

Source: Australian Bureau of Statistics (ABS), Labour force, Australia, cat. no. 6291.0.55.001, ABS, Canberra, 18 September 2014, accessed 30 September 2014.

In 2004–05, 28.4 per cent of all persons aged 55 years and over were participating in the labour force. This is an increase compared with the previous year when the corresponding rate was 27.0 per cent. The participation rate continued to rise for all subsequent years to 2012–13 (when it reached 35.1 per cent), which is consistent with a trend that had been occurring since 1998–99. In other words, there is no evidence that the increase in the labour force participation rate for mature workers since 2004–05 was due to the introduction of the MAWTO as it appears to be part of a general trend of rising participation evident since 1998–99. (Chart 2)

Source: Australian Bureau of Statistics (ABS), Labour force, Australia, cat. no. 6291.0.55.001, ABS, Canberra, 18 September 2014, accessed 30 September 2014.

When the MAWTO was introduced the Government maintained that it was part of a strategy to deal with the demographic challenge posed by the ageing of the population, by boosting economic growth through increasing productivity and labour force participation.[13] However, even had the MAWTO significantly increased labour force participation it is doubtful it would have achieved its overall aim of boosting economic growth. According to the 2002–03 Intergenerational Report, increasing the labour force participation rate for older workers with an already low participation rate would have only a limited impact on the overall participation rate and hence on economic growth.[14] There would, however, be other benefits such as higher income for older workers.

Key provisions

Amendments to the ITAA 1997

Currently, Subdivision 61–K of the ITAA 1997 provides that an Australian resident individual who was born before 1 July 1957 and who has worked during the current year may get a tax offset or MAWTO during the current year. The amount of the MAWTO, up to a maximum of $500, depends on the amount of an eligible individual’s net income from working.

The current method for working out the amount of MAWTO for an eligible individual has been indicated in the Background section above.

Item 2 of Schedule 1 repeals Subdivision 61–K.

Broadly, an individual’s net income from working as defined in section 995-1 of the ITAA 1997 is the total amounts of assessable income that are rewards for personal efforts or skills, less any allowable deductions. Item 3 of Schedule 1 deletes this definition as it is no longer required after the repeal of the MAWTO.

Application

Item 6 of Schedule 1 provides that the repeal of the MAWTO by items 1, 2 and 3 and the consequential amendments made by items 4 and 5 to Schedule 1 to the TAA 1953 apply to assessments for the 2014–15 income year and later income years.

Schedule 2—Abolishing the seafarer tax offset

Background

The seafarer tax offset in Subdivision 61–N of the ITAA 1997 was introduced by the Tax Laws Amendment (Shipping Reform) Act 2012, effective from 21 June 2012 to provide an incentive for companies to employ Australian seafarers.[15]

Section 61–710 provides a tax offset to a company equal to 30 per cent of the amounts paid to individuals in respect of their employment, including leave entitlements and work-related training. Each individual has to be employed for 91 days or more in the income year in order for the company to qualify for the offset.

The Explanatory Memorandum states that the low level of claims for the seafarer tax offset indicates that it has not been an effective stimulant for the employment of Australian seafarers on overseas voyages.[16]

Stakeholder views

The Australian Shipowners Association expressed the view that while the budget impact of abolishing this measure is miniscule, the consequential impact is that it decimates any possibility of a company investing in a ship that would operate under the Australian International Shipping Register.[17]

Farstad Shipping (Indian Pacific) Pty Ltd, a provider of specialised offshore vessels to the international oil and gas industry, advises that it does not support abolishing the seafarer tax offset. It states that the intent of the seafarers tax offset is to encourage the employment of Australian seafarers in international activities and its continuation would greatly enhance the training and career opportunities that the company can provide.[18]

Financial implications

The Explanatory Memorandum states that this measure will have the following fiscal impact over the forward estimates.[19]

2013–14

2014–15

2015–16

2016–17

2017–18

-

-

$4m

$4m

$4m

Key provisions and application

Item 2 of Schedule 2 repeals Subdivision 61–N.

Item 5 provides that the amendments made by Schedule 2 apply to assessments for the 2015–16 income year and later income years.

Schedule 3—Rates of R&D tax offset

Background

The current R&D tax incentive came into effect from 1 July 2011. The R&D tax incentive assists businesses to offset some of the costs of doing R&D and aims to promote innovation. The program is administered jointly by AusIndustry (on behalf of Innovation Australia) and the Australian Taxation Office (ATO).[20] The R&D tax incentive replaced the previous R&D tax concession.[21]

The operation of the R&D tax incentive

The R&D tax incentive operates by enabling companies to receive a tax offset for eligible R&D expenditure, rather than claiming R&D expenditure as a normal expense. A tax offset reduces the amount of income tax payable, after calculating the basic income tax liability.[22] If a company claims an item under the R&D tax incentive, it cannot also claim it as a normal business expense.

Because the rate of the offset (currently 40 or 45 per cent) is greater than the company tax rate (currently 30 per cent), companies have an additional incentive to engage in research and development.

If a tax offset exceeds the tax otherwise payable, the way that the excess is treated depends on whether the tax offset is refundable or non-refundable. A non-refundable offset that exceeds tax otherwise payable can be carried forward to future income tax years. A refundable tax offset that exceeds tax otherwise payable may be refunded to the entity (subject to certain rules).[23]

Eligibility

There are several criteria that must be met in relation to the type of entity claiming the offset, and the type of R&D activity for which it is claimed.[24] The 45 per cent refundable tax offset is available to entities with an aggregated annual turnover of less than $20 million, while the 40 per cent non-refundable tax offset is available to entities above that threshold.[25]

Companies accessing the R&D tax incentive

The annual report of the ATO for 2012–13 shows that during that financial year there were:

•       5,686 claims for the 45 per cent refundable tax offset, with a total value of $3.3 billion and

•       789 claims for the 40 per cent non-refundable tax offset, with a total value of $7.7 billion.[26]

Changes announced in the 2014–15 Budget

In the 2014–15 Budget, the Government announced that it would reduce the rates of the refundable and non-refundable tax offset by 1.5 per cent, effective from 1 July 2014.[27] The Budget papers stated that:

Consistent with the Government’s commitment to cut the company tax rate from 1 July 2015, the Government will preserve the relative value of the Research and Development Tax Incentive by reducing the rates of the refundable and non-refundable offsets …[28]

While the budget papers note the intention to cut the company tax rate from 1 July 2015, the reduction in the R&D tax incentive will take place from 1 July 2014. This means that for the 2014–15 financial year, the margin between the company tax rate and the R&D tax incentive will decrease (for both the refundable and non-refundable offset), but return to the current margin in 2015–16.[29]

The refundable tax offset for companies making a tax loss

The refundable tax offset can provide additional cash flow for companies with no taxable income. In economic terms, this cash-flow is either an interest free loan (if the company goes on to make a taxable profit), or equivalent to a grant (if the company never makes a taxable profit).[30] The changes to the rate of the refundable tax offset reduce this cash-flow to companies with no taxable income, in absolute terms (regardless of any changes to the company tax rate).

Industry responses

There was little direct industry response to the announced changes. RSM Bird Cameron wrote that while the reduction would reduce government support for R&D, the reduction was not significant.[31] A KPMG summary noted that it was ‘disappointed’ with the cut in the 2015–16 financial year, and that while the reduction in company tax rate would match the reduction in the offset, that cut in company tax would be offset by the proposed paid parental leave levy for companies with taxable income over $5 million.[32] One industry member commented that the reduction was ‘sending a clear message that innovation is not a priority’.[33]

In its submission to the inquiry on the Bill, PricewaterhouseCoopers (PwC) expressed concern that the proposed changes to the offset rates will give rise to undesirable and unintended consequences and therefore diminish the support for research and development that the R&D tax incentive currently provides.[34]

Redarc Electronics stated that it was deeply concerned that the R&D measures in the Bill are ‘ill-conceived and will adversely impact on [the company’s] ability to utilise the benefits of the incentives in furthering [its] R&D and its commercialisation’.[35]

Financial impact

The Explanatory Memorandum states that this measure has the following fiscal impact over the forward estimates period.[36]

2013–14

2014–15

2015–16

2016–17

2017–18

-

$70m

$160m

$200m

$190m

Key issues provisions

Subdivision 355–C of the ITAA 1997 deals with entitlements to the R&D tax offset by an R&D entity.

The rate of the R&D tax offset is set out in the Table in subsection 355–100(1).

Item 1 of the Table provides that an R&D entity, to which item 2 of the Table does not apply, is entitled to a R&D tax offset of 45 per cent of the expenditure on eligible R&D activities, if its aggregated turnover for an income year is less than $20 million. Item 1 of Schedule 3 reduces this rate by 1.5 per cent to 43.5 per cent.

Item 2 of the Table in subsection 355-100(1) will apply to the company where two or more exempt entities, irrespective of their relationship, beneficially own interests in the company carrying more than 50 per cent of the voting rights or rights to a distribution of income or capital.[37] Item 2 of Schedule 3 reduces the rate of R&D tax offset applying in these circumstances by 1.5 per cent to 38.5 per cent.

Item 3 of the Table provides that in any other case, not covered by items 1 and 2, the R&D entity is entitled to a R&D tax offset of 40 per cent of the expenditure on eligible R&D activities. Item 3 of Schedule 3 reduces this rate to 38.5 per cent.

Application of amendments

Item 5 of Schedule 3 provides that the amendments made by this Schedule apply in relation to assessments for income years commencing on or after 1 July 2014.

Schedule 4—Deductible gift recipients

Background

A deductible gift recipient is an entity to which gifts may be claimed as tax deductions by taxpayers. Subdivision 30—B of the ITAA 1997 sets out general categories of purposes or activities within which funds, authorities or entities are able to receive tax deductible gift. Such entities are known as deductible gift recipients, or DGRs. Whether or not an entity falls within one of the general categories is determined upon application, by the Commission of Taxation. The deductibility of any gift is subject to any conditions or limitation set out in subsection 30-15(1) of Subdivision 30–A of the ITAA 1997.

Where a certain fund, authority or entity is not eligible to receive deductible gifts because its purposes or activities do not fall into one on the general categories of DGRs, it has been the practice of governments to propose to the Parliament that a certain fund, authority or entity be listed by name in the tax laws. There are no coherent guidelines, criteria or principles guiding when the Government will propose to the Parliament that an entity should be specifically listed. Once listed, entities are known as ‘specifically listed DGRs.’ Subdivision 30–G gives an index to all the specially listed DGRs in Subdivision 30–B.

New specifically listed deductible gift recipients

The amendments proposed in Schedule 4 would include the following entities as specifically listed DGRs:

Australian Schools Plus Ltd

In relation to Australian Schools Plus, the Explanatory Memorandum to the Bill states:

Australian Schools Plus promotes the education of students in schools facing disadvantage. Its primary purpose is to collect tax deductible donations from members of the public and distribute them to disadvantaged schools.[38]

East African Fund

In relation to the East Africa Fund, the Explanatory Memorandum to the Bill states:

The East African Fund promotes the education of children in rural communities in East Africa. It also runs the School of St Jude which educates children in the Arusha region of Tanzania.[39]

Minderoo Foundation trust

In relation to activities of the Minderoo Foundation Trust, the Explanatory Memorandum to the Bill states:

The main objects of the Trust are advancing Indigenous and disadvantaged Australians. The Minderoo Foundation Trust can also promote any purpose which is charitable at law as approved by the Australian Charities and Not-for-profits Commission or the Commissioner of Taxation.[40]

Further, the Explanatory Memorandum asserts that:

The specific listing of The Minderoo Foundation Trust is subject to the Trust not accepting tax deductible gifts for the purposes of primary or secondary education, childcare or religion unless the relevant activities would be deductible under one or more of the general DGR categories.[41]

The Explanatory Memorandum asserts that the specific listing of the Trust as a DGR would be conditional on the Trust refraining from the activities set out in the Explanatory Memorandum. However, nothing in the Bill includes any such condition. Accordingly, there would appear no basis in the proposed law for the Commissioner to revoke DGR status to the Trust, or disallow deductions to donors, on the basis that the Trust does not comply with the restrictions stated in the Explanatory Memorandum. This aspect of the Bill could be clarified.

Financial implications

According to the Explanatory Memorandum, the revenue implications of this measure are as follows:

Organisation

2013-14

$m

2014-15

$m

2015-16

$m

2016-17

$m

2017-18

$m

Australian Schools Plus Ltd

-

-0.7

-2.7

-2.7

-2.7

East African Fund

-

-

-

-

-

The Minderoo

Foundation Trust

-

-

-

-

-

Source: Explanatory Memorandum, Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, p. 5, accessed 25 September 2014.

Key provisions and application

Item 1 amends the Table in subsection 30–25(2) in Subdivision 30–B dealing with specific education recipients, to add Australian Schools Plus Ltd as proposed item 2.2.43. Item 4 adds the Australian Schools Plus Ltd as proposed item 25B to the index. The gift must be made on or after 1 April 2014.

Item 2 amends the Table in subsection 30–80(2) in Subdivision 30–B dealing with specific international affairs recipients, to add East African Fund as proposed item 9.2.15. Item 5 adds the East African Fund as proposed item 45B to the index. The gift must be made on or after 1 July 2014.

Item 3 amends the Table in subsection 30–105 in Subdivision 30–B dealing with specific other recipients, to add the Minderoo Foundation Trust as proposed item 13.2.21. Item 6 adds the Minderoo Foundation Trust as proposed item 72B to the index. The gift must be made on or after 1 January 2014.

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[1].              Income Tax Assessment Act 1997 and Taxation Administration Act 1953, accessed 13 October 2014.

[2].              Selection of Bills Committee, Report No. 12 for 2014, The Senate, Canberra, 24 September 2014, accessed 22 October 2014.

[3].              Senate Economics Legislation Committee, Inquiry into the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, The Senate, Canberra, 2014, accessed 22 October 2014.

[4].              Explanatory Memorandum, Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, pp. 10–12, 15–16, 21–22 and 25, accessed 23 September 2014.

[5].              Parliamentary Joint Committee on Human Rights, Twelfth report of the 44th Parliament, The Senate, Canberra, 24 September 2014, p. 22, accessed 13 October 2014

[6].              Ibid., p. 7.

[7].              Treasury, Phase out of the mature age worker tax offset: explanatory material, p. 5, accessed 23 September 2014.

[8].              Explanatory Memorandum, op. cit., p. 7.

[9].              Ibid., p. 8.

[10].              M Thomas and P Yeend, ‘Workforce participation measures’, Budget review 2014–15, Research paper series, 2013–14, Parliamentary Library, Canberra, p. 145, accessed 23 September 2014.

[11].              Ibid., p. 3.

[12].              Ibid., p. 8.

[13].              Explanatory Memorandum, Tax Laws Amendment (2005 Measures No. 1) Bill 2005, p. 23, accessed 12 September 2014.

[14].              For example, a large ten percentage point rise in the participation rate of male workers aged 55 years and over would lead to an increase in the overall participation rate of at most two percentage points. Australian Government, Intergenerational report: budget paper no. 5: 2002–03, 2002, p. 28, accessed 12 September 2014.

[15].              Tax Laws Amendment (Shipping Reform) Act 2012 commenced on Royal Assent, see Bill homepage: Parliament of Australia, ‘Tax Laws Amendment (Shipping Reform) Bill 2012 homepage’, Australian Parliament website, accessed 26 September 2014.

[16].              Explanatory Memorandum, paragraph 2.7, p. 14.

[17].              Australian Shipowners Association, Submission to the Senate Economics Legislation Committee, Inquiry into the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, 9 October 2014, accessed 23 October 2014.

[18].              Farstad Shipping (Indian Pacific) Pty Ltd, Submission to the Senate Economics Legislation Committee, Inquiry into the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, 10 October 2014, accessed 23 October 2014.

[19].              Explanatory Memorandum, op. cit., p. 4.

[20].              Australian Government, ‘R&D tax incentive’, business.gov.au website, accessed 23 September 2014.

[21].              For a discussion of the process leading to the current arrangements, see J Murray, Tax Laws Amendment (Research and Development) Bill 2010, Bills digest, 165, 2009–10, Parliamentary Library, Canberra, 2010, accessed 15 September 2014.

[22].              Income Tax Assessment Act 1997, subsection 4-10(3), method statement, Step 4, accessed 13 October 2014.

[23].              Australian Taxation Office (ATO), Research and development tax incentive - refundable and non-refundable tax offsets, Fact sheet, ATO, October 2011, accessed 18 September 2014.

[24].              ATO, R&D tax incentive: eligibility, 11 December 2012, accessed 26 September 2014.

[25].              ATO, Research and development tax incentive - refundable and non-refundable tax offsets, op. cit.

[26].              ATO, Annual report: 2012–13, 2013, p. 68, accessed 26 September 2014.

[27].              Australian Government, Budget measures: budget paper no. 2: 2014–15, 2014, p. 18, accessed 26 September 2014.

[28].              Ibid.

[29].              See also T Dale, ‘Research and Development tax incentive– reduction in rates of offset’, Budget review 2014–15, Research paper series,
2013–14, p. 108, Parliamentary Library, Canberra, 2014, accessed 26 September 2014.

[30].              For more detail see T Dale, ‘Research and Development tax incentive– reduction in rates of offset’, Budget review 2014–15, op. cit., and Annex to Chapter 8 of the Report on the review of the national innovation system, Review of the National Innovation System Panel, 2008, accessed 26 September 2014.

[31].              RSM Bird Cameron, ‘2014–15 Federal Budget - tax incentives and grants’, RSM Bird Cameron website, accessed 26 September 2014.

[32].              KPMG, Federal Budget 2014: R&D tax incentive and grant funding, 2014, accessed 26 September 2014.

[33].              B Karlovsky, ‘Federal Budget 2014: "disappointing" budget stifles ICT sector’, ARN website, 14 May 2014, accessed 26 September 2014.

[34].              PricewaterhouseCoopers, Submission to the Senate Economics Legislation Committee, Inquiry into the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, 13 October 2014, p. 1, accessed 23 October 2014.

[35].              Redarc Electronics, Submission to the Senate Economics Legislation Committee, Inquiry into the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, n.d., accessed 23 October 2014.

[36].              Explanatory Memorandum, op. cit., p. 4.

[37].              ATO, ‘Income tax: research and development - tax incentive - combination of exempt entities’, ATO Interpretative Decision, ATO ID 2013/11, ATO website, accessed 25 September 2014.

[38].              Explanatory Memorandum, paragraph 4.6, p. 23.

[39].              Ibid., paragraph 4.7, p. 24.

[40].              Ibid., paragraph 4.10.

[41].              Ibid., paragraph 4.11.