R&D tax credits - Government support increased

In the May 2009 budget, the Commonwealth Government announced changes to the current R&D tax concession program to increase the level of support available and make the refundable credit available to companies in tax loss with no limit on the level of R&D expenditure they undertake.

The main points of the program are:

• Small firms with less than $20 million pa turnover will receive a tax refund of 45% when they file their tax return (= 150% concession) 
• Firms with more than $20 million pa turnover will receive a 40% tax credit on filing their return (=133% deduction) 

As an interim step, the R&D expenditure cap for the current tax concession offset will be increased from $1 million to $2 million for 2009-2010. The R&D Tax Credit legislation is not yet in final form but the system will come into effect from 1 July 2010.

TPD Insurance in Super

An important legislative change to insurance and superannuation funds has occurred which could have significant impact on your ability to claim tax deductions for premiums and could also impact on your ability to access an optimum payout if a claim is made down the track.

The Government recently announced it would provide transitional relief to defer the proposed changes to superannuation funds regarding their claims for deductions for Total and Permanent Disability (TPD) insurance premiums.

Now, funds may claim a full deduction for TPD premiums until 30 June 2011.

After that time the legislation will require a policy to meet the “disability superannuation benefit” definition.

This will require two medical practitioners to certify that because of the ill-health, the client is unlikely to ever be gainfully employed in a capacity for which he or she is qualified because of education, experience or training.

After 30 June 2011, insurance premiums will need to be split – with “any occupation” TPD insurance to be held inside the super fund and the balance of the “own occupation” cover held outside super. This will ensure full access to benefits in the event of a claim, and will also be most tax effective after the change in the legislation takes effect.

Please consider this important change when reviewing your insurances.