Rewarding innovation and investment

The Government recognises how important productivity growth is for higher living standards. That is why we are progressing reforms to support businesses responding to changes in the economy and investment.

Supporting Investment in Business Transformation

The Government is progressing reforms to allow companies to carry back tax losses to get a refund of past tax paid. Commencing as a one year loss carry-back in 2012-13, this reform will be extended from 2013-14 to allow companies to carry back up to $1 million of losses against tax paid up to two years earlier. This will help companies innovate and adapt in an economy in transition. Loss carry-back is estimated to provide assistance to nearly 110,000 companies over its first four years, which includes one in six manufacturing companies and almost 100,000 small businesses.

Facilitating Investment in Significant Infrastructure

The Government is improving incentives for businesses to invest in nationally significant infrastructure by introducing an uplift allowance for designated infrastructure projects from 2012-13. This new incentive will preserve the real value of tax losses for investors by uplifting their value over time. Eligible losses will also be exempted from the continuity of ownership test and the same business test, ensuring they will continue to be available if circumstances change.

Better Targeting Support for Investment in R&D

An important source of productivity growth is the decisions of individual businesses to innovate. The Government has replaced outdated arrangements with the new R&D tax incentive. Introduced on 1 July 2011, the R&D tax incentive doubles the rate of assistance and improves cash-flow for small and medium sized companies and targets assistance through a clearer definition of R&D activities.

The Government has also announced that from 1 July 2013 the R&D tax incentive will be better calibrated to support innovation by ensuring the incentive is targeted at more responsive small and medium companies.

Supporting our Agricultural Sector

The ability of our farmers to adapt to change is key to maintaining the strength of this sector. That is why the Government is making enhancements to the Farm Management Deposits (FMDs) Scheme to make it a more effective risk management tool and reduce red tape. The non-primary production income threshold will be increased from $65,000 to $100,000 and existing FMD accounts held for at least 12 months will be able to be consolidated.

New tax breaks for small business