Inserts for
Tax Laws Amendment (2013 Measures No. 2) Bill 2013: quarterly R&D credits

EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  			
2.  Schedule ??	The day this Act receives the Royal Assent.		
3.  			
Schedule ??—Quarterly R&D credits
Part 1—Main amendment
Taxation Administration Act 1953
1  After Part 2‑10 in Schedule 1
Insert:
Part 2‑15—Quarterly credits of refundable tax offsets
Division 48—Quarterly credits
Table of Subdivisions
	Guide to Division 48
48‑A	Object
48‑B	Participating in the quarterly credits system
48‑C	Tests for participation
48‑D	Working out and paying quarterly credit amounts
48‑E	End of year reconciliation
48‑F	Ending participation
48‑P	Other matters
Guide to Division 48
48‑1  What this Division is about
You can apply to participate in the quarterly credits system for an income year if you expect to be entitled to refundable tax offsets for the income year that are covered by the system.
Participating gives you quarterly credits towards your likely refund from those tax offsets. These credits will either be based on your refund from a recent income year, or on a varied amount chosen by you after estimating your refund for the current year.
A reconciliation happens after the current year’s assessment. General interest charge may be payable if you chose to base your credits on a varied amount and those credits are too high.
Subdivision 48‑A‑Object
Table of sections
48‑3	Object
48‑3  Object
		The object of this Division is to benefit the Australian economy by improving entities’ cash flow by enabling them to realise the benefit of certain expected refundable tax offsets on a quarterly basis during the income year.
Subdivision 48‑B—Participating in the quarterly credits system
Table of sections
48‑5	Participating in the quarterly credits system
48‑10	Refusing participation
48‑15	Applying to participate
48‑5  Participating in the quarterly credits system
	(1)	The Commissioner may, on application, allow you to participate in the *quarterly credits system for:
	(a)	each of the *instalment quarters in an income year, other than any that ended more than 14 days before the day the Commissioner receives your application; and
	(b)	one or more specified *tax offsets covered by section 48‑100.
Note:	If you are dissatisfied with a decision under this subsection, you may object against it in the manner set out in Part IVC (see section 48‑700).
	(2)	The Commissioner must notify you in writing of:
	(a)	the Commissioner’s decision under subsection (1); and
	(b)	if the decision refuses to allow you to participate—the reasons for the decision.
48‑10  Refusing participation
	(1)	The Commissioner must, under subsection 48‑5(1), refuse to allow you to participate for:
	(a)	any of the *instalment quarters, and a specified *tax offset, if the Commissioner is aware that you fail a test in Subdivision 48‑C necessary for that participation; or
	(b)	a specified instalment quarter, and a specified tax offset, if during that instalment quarter you have already withdrawn under section 48‑400 from participating in the *quarterly credits system for that tax offset.
Note 1:	The Commissioner may allow you to participate to the extent that paragraph (a) or (b) does not prevent this.
Note 2:	This subsection applies separately for each tax offset mentioned in your application.
	(2)	The Commissioner may, under subsection 48‑5(1), refuse to allow you to participate for one or more specified *instalment quarters and *tax offsets if:
	(a)	you fail to give the Commissioner any information in accordance with section 48‑15; or
	(b)	for a tax offset listed in table item 20 (about R&D) in section 48‑100—during the income year:
	(i)	you failed to give *Innovation Australia any information in accordance with section 28H of the Industry Research and Development Act 1986; or
	(ii)	Innovation Australia refused under paragraph 28AA(1)(d) of that Act to make a finding under subsection 28A(1) of that Act about you and all or part of an activity.
48‑15  Applying to participate
	(1)	An application to participate in the *quarterly credits system for one or more *instalment quarters in an income year, and one or more *tax offsets, must be:
	(a)	in the *approved form; and
	(b)	given to the Commissioner before the 15th day after the end of the income year.
	(2)	The Commissioner may request you in writing to give specified information to the Commissioner about your application.
	(3)	The request may be for the information to be given:
	(a)	in the *approved form; and
	(b)	within 14 days after the request was made, or within a further period allowed by the Commissioner.
Note:	A failure to give the information in accordance with this subsection may result in the Commissioner refusing to allow you to participate (see subsection 48‑10(2)).
Subdivision 48‑C—Tests for participation
Table of sections
48‑100	Tests for participation
48‑105	Reasonable receipt test
48‑110	Complying taxpayer test
48‑115	Excusing instances of noncompliance
48‑120	Applying for noncompliance to be excused
48‑100  Tests for participation
		To participate in the *quarterly credits system for one or more *instalment quarters in an income year and a *tax offset listed in the table, you must pass each of the following tests:
	(a)	the reasonable receipt test in section 48‑105;
	(b)	the complying taxpayer test in section 48‑110;
	(c)	any extra test listed in the table for the tax offset.

Relevant *tax offsets and any extra tests	
Item	Participating in the *quarterly credits system for this *tax offset:	requires you to pass these extra tests (if any):	
20	the *tax offset to which entities become entitled under section 355‑100 (about R&D) of the Income Tax Assessment Act 1997	you must have been entitled to a tax offset under that section for at least one of the last 5 income years	
48‑105  Reasonable receipt test
		It must be reasonable to expect that:
	(a)	you will become entitled to the *tax offset for the income year; and
	(b)	the tax offset will be subject to the refundable tax offset rules.
48‑110  Complying taxpayer test
	(1)	You pass the complying taxpayer test in this section if:
	(a)	there is total compliance with subsection (2); or
	(b)	each instance of noncompliance with subsection (2) is covered by one of the following subparagraphs:
	(i)	it has been excused under subsection 48‑115(1);
	(ii)	it is the subject of a pending application to be so excused;
	(iii)	the period for making such an application about it is yet to end (see subsection 48‑120(1)).
	(2)	For there to be total compliance with this subsection:
	(a)	each of the entities listed in subsection (3) must, during the income year, be complying with its obligations under:
	(i)	*taxation laws; and
	(ii)	any laws listed in subsection (4) for the *tax offset; and
	(b)	each of those entities must have an established history of compliance with its obligations under those laws over the last 5 income years; and
	(c)	it must be reasonable to expect that each of those entities will continue to comply with its obligations under those laws in the future.
Note:	Outstanding tax‑related liabilities, outstanding tax returns and convictions of tax offences are examples of noncompliance.
	(3)	The entities are as follows:
	(a)	you;
	(b)	each entity *connected with you;
	(c)	each *affiliate of yours, or each entity of which you are an affiliate;
	(d)	each of your partners if you are a partnership;
	(e)	each of your *general partners if you are a *corporate limited partnership;
	(f)	each person in the person’s capacity as a trustee if you are a trust and the person is your trustee;
	(g)	each individual in his or her capacity as a director (within the meaning of the Corporations Act 2001), if:
	(i)	you; or
	(ii)	an entity covered by any of paragraphs (b) to (f) in relation to you;
		is a body corporate and the individual is one of its directors;
	(h)	each individual in his or her capacity as a member of an unincorporated association’s or body’s committee of management, if:
	(i)	you; or
	(ii)	an entity covered by any of paragraphs (b) to (f) in relation to you;
		is an unincorporated association or body and the individual is a member of its committee of management.
	(4)	The extra laws for the *tax offset are as follows:

Extra laws that must be complied with	
Item	For this *tax offset:	the extra laws are:	which are administered by:	
20	the tax offset listed in table item 20 (about R&D) in section 48‑100	Part III of the Industry Research and Development Act 1986	*Innovation Australia	
48‑115  Excusing instances of noncompliance
	(1)	The Commissioner may, on application, excuse one or more instances of noncompliance with subsection 48‑110(2).
Note:	If you are dissatisfied with a decision under this subsection, you may object against it in the manner set out in Part IVC (see section 48‑700).
	(2)	In deciding whether to excuse that noncompliance, the Commissioner must have regard to:
	(a)	the consequences of that noncompliance; and
	(b)	the consequences of any other instances of noncompliance with subsection 48‑110(2) by any of the entities listed in subsection 48‑110(3); and
	(c)	the likelihood of each of those entities complying in the future with its obligations referred to in subsection 48‑110(2); and
	(d)	the likely consequences if any of those entities does not so comply; and
	(e)	to the extent that any of the above paragraphs involves noncompliance with an obligation under a law listed in subsection 48‑110(4)—the views of the administering agency listed in that subsection for that law.
	(3)	The Commissioner may, under subsection (1), refuse to excuse that noncompliance if you fail to give the Commissioner any requested information in accordance with section 48‑120.
	(4)	The Commissioner must notify you in writing of:
	(a)	the Commissioner’s decision under subsection (1); and
	(b)	if the decision refuses to excuse that noncompliance—the reasons for the decision.
	(5)	A decision under subsection (1) continues in force for any future income years that you apply to participate in the *quarterly credits system.
48‑120  Applying for noncompliance to be excused
	(1)	An application for the Commissioner to excuse an instance of noncompliance with subsection 48‑110(2) must be made:
	(a)	either in your application under section 48‑15, or later in the *approved form; and
	(b)	if made later in the approved form—within 14 days after the day the instance of noncompliance happened or started, or within a further period allowed by the Commissioner.
	(2)	The Commissioner may request you in writing to give specified information to the Commissioner about your application.
	(3)	The request may be for the information to be given:
	(a)	in the *approved form; and
	(b)	within 14 days after the request was made, or within a further period allowed by the Commissioner.
Note:	A failure to give the information in accordance with this subsection may result in the Commissioner refusing to excuse that noncompliance (see subsection 48‑115(3)).
Subdivision 48‑D—Working out and paying quarterly credit amounts
Table of sections
48‑200	Quarterly credit amounts
48‑205	Standard amount
48‑210	Choosing a varied amount
48‑215	Disallowing proposed varied amounts
48‑220	Notifying the Commissioner of proposed varied amounts
48‑225	When quarterly credit amounts are payable to you
48‑230	When quarterly credit amounts are payable by you
48‑235	The amount’s quarterly credit due day
48‑200  Quarterly credit amounts
		If you are participating in the *quarterly credits system for an *instalment quarter in an income year (the present year) and one or more *tax offsets (the present tax offsets), your quarterly credit amount for the instalment quarter and the present tax offsets is:
	(a)	any varied amount applying under section 48‑210 for the instalment quarter and the present tax offsets; or
	(b)	otherwise—the standard amount worked out under section 48‑205.
Note:	If you recommence participating in the quarterly credits system, paragraph (a) covers any varied amount applying for the instalment quarter under your earlier participation in the system.
48‑205  Standard amount
	(1)	If:
	(a)	for the most recent income year (the reference year) for which the Commissioner has made an assessment of your income tax, you were entitled to *tax offsets of the same kinds as each of the present tax offsets; and
	(b)	those reference year tax offsets were subject to the refundable tax offset rules; and
	(c)	the reference year is one of the last 2 income years immediately before the present year;
the standard amount worked out under this section is 1/4 of the lesser of:
	(d)	the total amount of those reference year tax offsets; and
	(e)	the total of your *tax offset refunds (for tax offsets of any kind) for the reference year.
Note:	If the instalment quarter is the first in the present year, the reference year will usually be a different year to that for later instalment quarters.
	(2)	Otherwise, the standard amount worked out under this section is nil.
48‑210  Choosing a varied amount
	(1)	You can choose to notify the Commissioner under section 48‑220 of a proposed varied amount for the *instalment quarter and the present tax offsets.
Note 1:	If you do, your notice must include a proposed varied amount for each later instalment quarter in the income year (see paragraph 48‑215(1)(a)).
Note 2:	A later notice can propose a replacement varied amount for those later instalment quarters.
	(2)	An amount you so notify for an *instalment quarter is the varied amount applying under this section for that instalment quarter and the present tax offsets if that amount is the most recent that:
	(a)	has been so notified for that instalment quarter; and
	(b)	has not been disallowed by the Commissioner.
That amount may be a nil or negative amount.
	(3)	The Commissioner may disallow a proposed varied amount.
Note:	If you are dissatisfied with a decision under this subsection, you may object against it in the manner set out in Part IVC (see section 48‑700).
	(4)	The Commissioner must notify you in writing of:
	(a)	a decision under subsection (3) to disallow a proposed varied amount; and
	(b)	the reasons for the decision.
48‑215  Disallowing proposed varied amounts
	(1)	The Commissioner must, under subsection 48‑210(3), disallow each proposed varied amount included in your notice under section 48‑220 if:
	(a)	that notice does not include a proposed varied amount for each *instalment quarter in the present year for which:
	(i)	you are participating in the *quarterly credits system; and
	(ii)	a *quarterly credit amount is yet to become payable; or
	(b)	for any of the proposed varied amounts included in that notice (the test amount), the sum of:
	(i)	the test amount; and
	(ii)	any of the other proposed varied amounts that are for earlier instalment quarters in the present year; and
	(iii)	your *quarterly credit amounts payable for any earlier instalment quarters in the present year;
		is less than nil or is likely to significantly exceed the amount worked out under subsection (2).
	(2)	To work out the amount under this subsection:
	(a)	estimate the amount likely to be the end of year amount under section 48‑355 (about reconciling amounts) for the present year; and
	(b)	work out how much of that estimate proportionately relates to those *instalment quarters in the present year, up to (and including) the instalment quarter for which the test amount is proposed, for which you are participating in the *quarterly credits system.
	(3)	The Commissioner may, under subsection 48‑210(3), disallow each proposed varied amount included in your notice under section 48‑220 if you fail to give the Commissioner any requested information in accordance with section 48‑220.
	(4)	The Commissioner must not, under subsection 48‑210(3), disallow the proposed varied amounts included in your notice under section 48‑220 if:
	(a)	neither subsection (1) nor (3) applies; and
	(b)	each of those proposed varied amounts is less than or equal to the amount that would otherwise be your *quarterly credit amount for the relevant *instalment quarter and the present tax offsets.
48‑220  Notifying the Commissioner of proposed varied amounts
	(1)	A notice of one or more proposed varied amounts must be:
	(a)	in the *approved form; and
	(b)	given to the Commissioner before the 15th day after the end of the earliest of the *instalment quarters to which the amounts relate.
Note:	You must keep records in relation to the varied amount (see section 262A of the Income Tax Assessment Act 1936).
	(2)	The Commissioner may request you in writing to give specified information to the Commissioner about the notice.
	(3)	The request may be for the information to be given:
	(a)	in the *approved form; and
	(b)	within 14 days after the request was made, or within a further period allowed by the Commissioner.
Note:	A failure by you to give the information in accordance with this subsection may result in the Commissioner refusing to allow the proposed varied amounts (see subsection 48‑215(3)).
48‑225  When quarterly credit amounts are payable to you
	(1)	The Commissioner must, on behalf of the Commonwealth, pay you your *quarterly credit amount for an *instalment quarter and the present tax offsets on or before the later of the following days:
	(a)	the 28th day of the month after the end of the instalment quarter unless all or a part of a December falls within the last month of the instalment quarter;
	(b)	if all or a part of a December falls within the last month of the instalment quarter—the next 28 February;
	(c)	if a request referred to in subsection (2) is made of you within the 21 days before the day referred to in paragraph (a) or (b)—the 28th day of the month after that in which you comply with the request.
Note 1:	See Division 3A of Part IIB for the rules about how the Commissioner must pay the amount. Division 3 of Part IIB allows the Commissioner to apply the amount as a credit against tax debts that you owe to the Commonwealth.
Note 2:	Interest is payable under Part IIIAB of the Taxation (Interest on Overpayments and Early Payments) Act 1983 if the Commissioner is late in paying your quarterly credit amount.
	(2)	For the purposes of paragraph (1)(c), the requests are as follows:
	(a)	a request by the Commissioner under subsection 48‑15(2) or 48‑220(2) relating to the *instalment quarter or any of the present tax offsets;
	(b)	a request covered by the following table:

Other requests for information that may cause a later due day	
Item	If the present tax offsets include:	a request of you by:	under this provision:	for information about:	
20	the tax offset listed in table item 20 (about R&D) in section 48‑100	*Innovation Australia	section 28H of the Industry Research and Development Act 1986	the making of a finding under subsection 28A(1) of that Act about you and an activity	
48‑230  When quarterly credit amounts are payable by you
	(1)	However, if your *quarterly credit amount for the *instalment quarter and the present tax offsets is a negative amount, you are liable to pay the Commonwealth that amount (expressed as a positive amount).
Note:	The amount will only be a negative amount if you choose a varied amount that is a negative amount.
	(2)	That amount is due on the *quarterly credit amount’s *quarterly credit due day.
Note:	For provisions about collection and recovery of the amount, see Part 4‑15.
	(3)	If any of that amount (the varied amount) remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
	(a)	starts on the *quarterly credit amount’s *quarterly credit due day; and
	(b)	ends on the last day any of the following remains unpaid:
	(i)	the varied amount;
	(ii)	general interest charge on any of the varied amount.
48‑235  The amount’s quarterly credit due day
		The quarterly credit due day for a *quarterly credit amount is:
	(a)	if that amount is a positive amount—the later of the days referred to in paragraphs 48‑225(1)(a) to (c); or
	(b)	if that amount is a nil or negative amount—the day that would have been the later of the days referred to in paragraphs 48‑225(1)(a) to (c) were that amount a positive amount.
Subdivision 48‑E—End of year reconciliation
Table of sections
48‑300	Debit equal to the total quarterly credits paid
48‑305	When the debit is due
48‑350	Liability to GIC on excess quarterly credits worked out using varied amounts
48‑355	Reconciled amount for the variation quarter
48‑300  Debit equal to the total quarterly credits paid
	(1)	You are liable to pay the Commonwealth an amount (a debit) under this section if:
	(a)	you are participating in the *quarterly credits system for one or more *instalment quarters in an income year and one or more *tax offsets; and
	(b)	on a particular day (the assessment day), the Commissioner makes an assessment:
	(i)	of the total of your *tax offset refunds for the income year; or
	(ii)	that you can get no such refunds for the income year.
Note:	The debit will be offset by a credit equal to the total of your tax offset refunds.
	(2)	The debit is equal to the sum of your *quarterly credit amounts for those *instalment quarters and those *tax offsets, less any of those amounts that have been repaid (whether as described in section 48‑420, 48‑425 or otherwise).
	(3)	The Commissioner must give you notice of the debit.
Note:	This could be done by including the debit in the notice of your assessment referred to in paragraph (1)(b).
48‑305  When the debit is due
	(1)	Parts of the debit may be due on different days.
	(2)	So much of the debit as does not exceed the total of your *tax offset refunds for the income year is due on the assessment day.
Note:	This part of the debit will be offset by the credit equal to the total of your tax offset refunds.
	(3)	So much of the debit (if any) as exceeds the total of your *tax offset refunds for the income year is due on the day your income tax for the income year:
	(a)	is due; or
	(b)	would have been due if you were liable to pay income tax for the income year.
Note 1:	For the day income tax is due, see section 5‑5 of the Income Tax Assessment Act 1997.
Note 2:	For provisions about collection and recovery of this excess, see Part 4‑15.
	(4)	If so much of the debit as is covered by subsection (3) (the excess) remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
	(a)	starts on the day the excess was due to be paid; and
	(b)	ends on the last day any of the following remains unpaid:
	(i)	the excess;
	(ii)	general interest charge on any of the excess.
48‑350  Liability to GIC on excess quarterly credits worked out using varied amounts
	(1)	You are liable to pay the *general interest charge under this section if:
	(a)	you are participating in the *quarterly credits system for an *instalment quarter (the variation quarter) in an income year and one or more *tax offsets; and
 	(b)	your *quarterly credit amount for the variation quarter and those tax offsets is a varied amount covered by paragraph 48‑200(a); and
	(c)	the amount (the reconciled amount) worked out under section 48‑355 for the variation quarter and those tax offsets is less than 85% of the sum (the total credits) of:
	(i)	the varied amount; and
	(ii)	your quarterly credit amounts for any earlier instalment quarters in the income year.
	(2)	You are liable to pay the *general interest charge on the difference between the total credits and the reconciled amount.
	(3)	You are liable to pay the charge for each day in the period:
	(a)	starting on the *quarterly credit due day for the varied amount; and
	(b)	ending on the earlier of:
	(i)	if you have a quarterly credit amount for one or more later *instalment quarters in the income year—the quarterly credit due day for the first of those later quarterly credit amounts; and
	(ii)	the day the Commissioner makes the assessment referred to in subsection 48‑300(1) for you and the income year.
Note:	Subparagraph (b)(i) includes the case where you have a nil or negative quarterly credit amount for a later instalment quarter.
	(4)	The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2). You must pay the charge within 14 days after you are given that notice.
Note 1:	Sections 28A and 29 of the Acts Interpretation Act 1901 explain how a notice may be given.
Note 2:	The Commissioner may remit the charge, see section 8AAG.
	(5)	If any of the *general interest charge to which you are liable under subsection (2) remains unpaid at the end of the 14 days referred to in subsection (4), you are also liable to pay the general interest charge on the unpaid amount for each day in the period:
	(a)	starting at the end of those 14 days; and
	(b)	ending on the last day any of the following remains unpaid:
	(i)	the unpaid amount;
	(ii)	general interest charge on the unpaid amount.
48‑355  Reconciled amount for the variation quarter
		The amount worked out under this section for the variation quarter and those *tax offsets is the greater of:
	(a)	the sum of the standard amounts worked under section 48‑205 for:
	(i)	the variation quarter; and
	(ii)	any earlier *instalment quarters in the income year for which you are participating in the *quarterly credits system; and
	(b)	the amount worked out from the following formula:

where:
end of year amount means the lesser of:
	(a)	either:
	(i)	the total amount of those *tax offsets and any other tax offsets for which you are participating in the *quarterly credits system for an earlier *instalment quarter in the income year; or
	(ii)	nil, if you are not entitled to any of the tax offsets referred to in subparagraph (i) for the income year; and
	(b)	the total of your *tax offset refunds (for tax offsets of any kind) for the income year.
number of instalment quarters so far means the number of *instalment quarters in the income year, up to (and including) the variation quarter, for which you are participating in the *quarterly credits system.
Subdivision 48‑F—Ending participation
Table of sections
48‑400	Withdrawing participation
48‑405	You must withdraw if you later fail a test
48‑410	Revoking participation if a default event happens
48‑420	Collecting and recovering quarterly credits paid for quarters for which you no longer participate
48‑425	Recovering quarterly credits paid by you for quarters for which you no longer participate
48‑400  Withdrawing participation
	(1)	You may withdraw from participating in the *quarterly credits system for any or all of the *instalment quarters (whether past, current or future) in the income year and one or more *tax offsets.
Note:	You will need to repay any quarterly credit amounts paid to you for instalment quarters that you later withdraw from (see section 48‑420).
	(2)	A withdrawal must be a notice:
	(a)	in the *approved form; and
	(b)	given to the Commissioner before the 15th day after the end of the income year.
	(3)	The withdrawal takes effect, for the *instalment quarters and *tax offsets specified in it, when it is given to the Commissioner.
Note:	You may apply to participate again in the quarterly credits system for later instalment quarters in the income year.
	(4)	A withdrawal is irrevocable.
48‑405  You must withdraw if you later fail a test
Basic rule
	(1)	You contravene this subsection if:
	(a)	you are participating in the *quarterly credits system for one or more *instalment quarters in an income year and one or more *tax offsets; and
	(b)	you fail a test in Subdivision 48‑C necessary for that participation for one of those tax offsets; and
	(c)	your participation for that tax offset is not revoked under section 48‑410; and
	(d)	you do not, within 28 days after failing that test, withdraw from participating in the quarterly credits system for all instalment quarters in the income year, and that tax offset, in accordance with section 48‑400.
Note 1:	This subsection applies separately for each tax offset to which the failure referred to in paragraph (b) is relevant.
Note 2:	Others will be taken to have contravened this subsection if you are a partnership, trust or unincorporated association or body, see Division 444.
Strict liability offence
	(2)	You commit an offence of strict liability if you contravene subsection (1).
Penalty:	60 penalty units.
Note 1:	For strict liability, see section 6.1 of the Criminal Code.
Note 2:	Section 4K of the Crimes Act 1914 applies to an offence against this subsection, so you commit an offence for each day after that 28 day period that you do not withdraw from the quarterly credits system.
Administrative penalty
	(3)	You are liable to pay to the Commissioner a penalty of 20 penalty units if you contravene subsection (1).
Note 1:	Division 298 in this Schedule contains machinery provisions for administrative penalties.
Note 2:	This administrative penalty is not payable if you are prosecuted under subsection (2) for the same contravention (see section 8ZE).
48‑410  Revoking participation if a default event happens
	(1)	The Commissioner may, by notice in writing given to you, revoke your participation in the *quarterly credits system for any or all of the *instalment quarters (whether past, current or future) in the income year and one or more *tax offsets if:
	(a)	at any time during the income year:
	(i)	you fail a test in Subdivision 48‑C necessary for that participation; or
	(ii)	for a tax offset listed in table item 20 (about R&D) in section 48‑100—*Innovation Australia refuses under paragraph 28AA(1)(d) of the Industry Research and Development Act 1986 to make a finding under subsection 28A(1) of that Act about you and all or part of an activity; or
	(b)	you do not lodge your *income tax return for the income year with the Commissioner on or before the required day.
Note:	If you are dissatisfied with a decision under this subsection, you may object against it in the manner set out in Part IVC (see section 48‑700).
	(2)	A revocation takes effect for the *instalment quarters and *tax offsets specified in the notice.
	(3)	A notice under subsection (1) must include the reasons for the revocation.
48‑420  Collecting and recovering quarterly credits paid to you for quarters for which you no longer participate
	(1)	If:
	(a)	on a particular day (the payment day), you are paid a *quarterly credit amount for an *instalment quarter in an income year and one or more *tax offsets; and
	(b)	under this Subdivision, you cease to participate in the *quarterly credits system for that instalment quarter and one or more of those tax offsets;
you are liable to repay the Commonwealth that amount.
	(2)	That amount is due on the payment day.
Note:	For provisions about collection and recovery of that amount, see Part 4‑15.
	(3)	If any of that amount (the repayable amount) remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
	(a)	starts on the payment day; and
	(b)	ends on the last day any of the following remains unpaid:
	(i)	the repayable amount;
	(ii)	general interest charge on any of the repayable amount.
48‑425  Recovering quarterly credits paid by you for quarters for which you no longer participate
		If:
	(a)	on a particular day (the payment day), you pay an amount under section 48‑230 for an *instalment quarter in an income year and one or more *tax offsets; and
	(b)	under this Subdivision, you cease to participate in the *quarterly credits system for that instalment quarter and those tax offsets;
the Commissioner must, on behalf of the Commonwealth, repay that amount to you on or before the 14th day after the day the notice is given that causes that cessation.
Note 1:	See Division 3A of Part IIB for the rules about how the Commissioner must pay that amount. Division 3 of Part IIB allows the Commissioner to apply that amount as a credit against tax debts that you owe to the Commonwealth.
Note 2:	Interest is payable under Part IIIAB of the Taxation (Interest on Overpayments and Early Payments) Act 1983 if the Commissioner is late in repaying that amount.
Subdivision 48‑P—Other matters
Table of sections
48‑700	Objecting to decisions
48‑800	Alternative constitutional basis
48‑700  Objecting to decisions
		A person who is dissatisfied with a decision of the Commissioner under any of the following provisions may object against it in the manner set out in Part IVC:
	(a)	subsection 48‑5(1);
	(b)	subsection 48‑115(1);
	(c)	subsection 48‑210(3);
	(d)	subsection 48‑410(1).
48‑800  Alternative constitutional basis
	(1)	Without limiting its effect apart from this subsection, this Division has the effect it would have if:
	(a)	subsection (2) had not been enacted; and
	(b)	a *quarterly credit amount could only be worked out for an entity that:
	(i)	is a *constitutional corporation; or
	(ii)	has its registered office (within the meaning of the Corporations Act 2001) or principal place of business (within the meaning of that Act) located in a Territory.
	(2)	Without limiting its effect apart from this subsection, this Division has the effect it would have if:
	(a)	subsection (1) had not been enacted; and
	(b)	*quarterly credit amounts could only be worked out in respect of activities, or parts of activities, conducted or to be conducted:
	(i)	solely in a Territory; or
	(ii)	solely outside of Australia; or
	(iii)	solely in a Territory and outside of Australia; or
	(iv)	for the dominant purpose of supporting *core R&D activities conducted, or to be conducted, solely in a Territory.
Part 2—Innovation Australia’s role
Industry Research and Development Act 1986
2  Subsection 4(1)
Insert:
instalment quarter has the same meaning as in the Income Tax Assessment Act 1997.
3  Subsection 4(1)
Insert:
quarterly credits system has the same meaning as in the Income Tax Assessment Act 1997.
4  Subsection 4(1)
Insert:
update cut‑off day has the meaning given by subsection 28BA(4).
5  Section 26A
Omit “The R&D entity can seek an advance finding to get”, substitute “The Board may make an advance finding to give”.
6  Section 26A
Omit “The R&D entity can seek a”, substitute “The Board may make a”.
7  Section 28
Omit “An R&D entity can seek” (wherever occurring), substitute “The Board may make”.
8  Section 28A
Repeal the section, substitute:
28A  Advance findings about the nature of activities
	(1)	The Board may make one or more findings to the following effect about an activity and an R&D entity:
	(a)	that all or part of the activity is a core R&D activity;
	(b)	that all or part of the activity is a supporting R&D activity in relation to one or more specified core R&D activities for which the entity has been or could be registered under section 27A for an income year;
	(c)	that all or part of the activity is neither:
	(i)	a core R&D activity; nor
	(ii)	a supporting R&D activity of a kind covered by paragraph (b).
Note 1:	A finding is reviewable (see Division 5).
Note 2:	A finding binds the Commissioner for the purposes of income tax assessments and the provision of quarterly credits (see subsections 355‑705(2) and (3) of the Income Tax Assessment Act 1997).
	(2)	The Board must not make a finding under subsection (1) about an activity and an R&D entity unless the Board is satisfied that the activity:
	(a)	is being conducted, or has been completed, during the income year applying under subsection (3); or
	(b)	is yet to be conducted, but that it is reasonable to expect that the activity will be conducted in any or all of the following income years:
	(i)	the income year applying under subsection (3);
	(ii)	either of the next 2 income years.
	(3)	The income year applying under this subsection is either:
	(a)	the income year in which the process of considering whether to make the finding starts; or
	(b)	the most recent income year before that income year if:
	(i)	paragraph 28AA(1)(a) or (b) caused that process to start; and
	(ii)	the R&D entity’s application, or the Commissioner’s request, (as appropriate) specifies that the income year applying under this subsection is to be that most recent income year; and
	(iii)	the R&D entity has not applied to register activities under section 27A for that most recent income year.
Note:	The process of considering whether to make the finding starts when the application or request is made, or when the Board starts considering whether to make the finding on its own initiative.
	(4)	If the Board makes a finding under subsection (1) about an activity that is being conducted, or has been completed, during the income year applying under subsection (3), the Board may specify in the finding the times to which the finding relates.
	(5)	This section has effect subject to section 32B (findings cannot be inconsistent with any earlier findings).
9  After section 28A
Insert:
28AA  Causing advance findings to be made
	(1)	If:
	(a)	an R&D entity applies for one or more findings under subsection 28A(1) about an activity and the R&D entity; or
	(b)	the Commissioner requests one or more findings under subsection 28A(1) about an activity and an R&D entity;
the Board must:
	(c)	make one or more findings under that subsection about all or part of the activity and the R&D entity; or
	(d)	if justified in accordance with the decision‑making principles—refuse to make a finding under that subsection about all or part of the activity and the R&D entity.
Note 1:	For requirements of applications by R&D entities, see section 28G.
Note 2:	Refusing to make a finding is reviewable (see Division 5).
Note 3:	Section 32A deals with the decision‑making principles.
	(2)	The Board may also make a finding under subsection 28A(1) on its own initiative in accordance with any applicable decision‑making principles.
Note:	Section 32A deals with the decision‑making principles.
10  At the end of Subdivision B of Division 3 of Part III
Add:
28BA  Updates about possible advance findings
	(1)	If:
	(a)	the Commissioner requests, or the Board on its own initiative is considering whether to make, one or more findings under subsection 28A(1) about an activity and an R&D entity; and
	(b)	the Board is aware that the R&D entity is participating in the quarterly credits system for an instalment quarter; and
	(c)	the findings would be relevant to that participation; and
	(d)	the Board realises it will not finish the process of considering whether to make the findings before the update cut‑off day (see subsection (4)) for the instalment quarter;
the Board must, before the end of that day, update the Commissioner about the progress of that process.
	(2)	After it updates the Commissioner, the Board may stop that process if the Commissioner has not requested it to be continued.
	(3)	An update under subsection (1) does not prevent the Board from:
	(a)	making, or refusing to make, any or all of the findings; or
	(b)	making contrary findings under this Part.
	(4)	The update cut‑off day for the instalment quarter is:
	(a)	the 21st day of the month after the end of the instalment quarter unless all or a part of a December falls within the last month of the instalment quarter; or
	(b)	if all or a part of a December falls within the last month of the instalment quarter—the next 21 February.
11  Subsection 28C(1)
Repeal the subsection, substitute:
	(1)	The Board may make one or more findings to the following effect about an activity and an R&D entity:
	(a)	that all or part of the activity is an activity (the overseas activity) that meets the conditions in section 28D;
	(b)	that all or part of the activity is not an activity that meets the conditions in section 28D.
Note 1:	A finding is reviewable (see Division 5).
Note 2:	An effect of a finding under paragraph (a) is that a tax offset may be available for expenditure incurred on the overseas activity after the finding comes into force (see Division 355 of the Income Tax Assessment Act 1997, in particular paragraphs 355‑210(1)(d) and (e) of that Act).
12  At the end of Subdivision C of Division 3 of Part III
Add:
28DA  Causing overseas activity findings to be made
	(1)	If:
	(a)	an R&D entity applies for one or more findings under subsection 28C(1) about an activity and the R&D entity; or
	(b)	the Commissioner requests one or more findings under subsection 28C(1) about an activity and an R&D entity;
the Board must:
	(c)	make one or more findings under that subsection about all or part of the activity and the R&D entity; or
	(d)	if justified in accordance with the decision‑making principles—refuse to make a finding under that subsection about all or part of the activity and the R&D entity.
Note 1:	For requirements of applications by R&D entities, see section 28G.
Note 2:	Refusing to make a finding is reviewable (see Division 5).
Note 3:	Section 32A deals with the decision‑making principles.
	(2)	The Board may also make a finding under subsection 28C(1) on its own initiative in accordance with any applicable decision‑making principles.
Note:	Section 32A deals with the decision‑making principles.
13  Subsection 28E(1)
Repeal the subsection, substitute:
	(1)	If an R&D entity has acquired, or has acquired the right to use, particular technology wholly or partly for the purposes of one or more R&D activities conducted, or to be conducted, during one or more income years, the Board may make a finding to the effect:
	(a)	that the technology is core technology for the R&D activities; or
	(b)	that the technology is not core technology for the R&D activities.
Note 1:	A finding is reviewable (see Division 5).
Note 2:	A finding under paragraph (a) means that a tax offset will not be available for expenditure incurred in acquiring, or in acquiring the right to use, the technology for the R&D activities (see subsection 355‑225(2) of the Income Tax Assessment Act 1997).
14  Subsections 28E(3) and (4)
Repeal the subsections.
15  At the end of Subdivision D of Division 3 of Part III
Add:
28EA  Causing core technology findings to be made
	(1)	If:
	(a)	an R&D entity applies for a finding under subsection 28E(1) about the R&D entity, one or more R&D activities and particular technology; or
	(b)	the Commissioner requests a finding under subsection 28E(1) about an R&D entity, one or more R&D activities and particular technology;
the Board must:
	(c)	make a finding under that subsection about the R&D entity, the R&D activities and the technology; or
	(d)	if justified in accordance with the decision‑making principles—refuse to make a finding under that subsection about the R&D entity, the R&D activities and the technology.
Note 1:	For requirements of applications by R&D entities, see section 28G.
Note 2:	Refusing to make a finding is reviewable (see Division 5).
Note 3:	Section 32A deals with the decision‑making principles.
	(2)	The Board may also make a finding under subsection 28E(1) on its own initiative in accordance with any applicable decision‑making principles.
Note:	Section 32A deals with the decision‑making principles.
16  Section 28F (heading)
Repeal the heading, substitute:
28F  Notice of findings or of decisions refusing to make findings
17  Subsections 28F(1) and (2)
Repeal the subsections, substitute:
	(1)	The Board must notify an R&D entity in writing of any findings, and of any decisions refusing to make findings, under this Division that relate to the R&D entity.
18  Subsection 28F(3)
Omit “or (2)”.
19  Subsection 28F(3) (note)
Omit “applicant’s”, substitute “R&D entity’s”.
20  Subsection 28F(4)
Omit “the notice if the notice includes one or more certificates”, substitute “each notice under subsection (1) of a finding”.
21  Subsection 28G(1) (heading)
Repeal the heading, substitute:
Applications by R&D entities for findings
22  Subsection 28G(2)
Omit “An”, substitute “However, an”.
23  Subsection 28H(1)
Repeal the subsection, substitute:
	(1)	The Board may request an R&D entity in writing to give such specified information, or specified kinds of information, to the Board as the Board believes could be relevant to the making of a finding under this Division relating to the R&D entity.
	(1A)	However, if as described in section 28B another entity applied for the finding on behalf of the R&D entity, the Board must first request in writing the information or kinds of information from that other entity.
24  Subsection 28H(2)
Omit “The request”, substitute “A request under subsection (1) or (1A)”.
25  Subsection 28H(2) (note 3)
Repeal the note, substitute:
Note 3:	A failure to give the information may result in a refusal to make a finding. It may also result in the revocation of the R&D entity’s participation in the quarterly credits system (see paragraph 48‑410(1)(a) and subsections 48‑110(1) and (4) in Schedule 1 to the Taxation Administration Act 1953).
26  Subsection 28H(3)
Omit “The request”, substitute “A request under subsection (1) or (1A)”.
27  Subsection 28H(4)
After “subsection (1)”, insert “or (1A)”.
28  Section 30A (table items 11 to 13)
Repeal the items, substitute:
11	An advance finding about the nature of an activity	Subsection 28A(1)	
11A	Refusing to make an advance finding about the nature of an activity	Paragraph 28AA(1)(d)	
12	A finding about an activity to be conducted outside Australia	Subsection 28C(1)	
12A	Refusing to make a finding about an activity to be conducted outside Australia	Paragraph 28DA(1)(d)	
13	A finding about particular technology	Subsection 28E(1)	
13A	Refusing to make a finding about particular technology	Paragraph 28EA(1)(d)	
29  At the end of section 32A
Add:
	; (d)	whether making a finding under Division 3 on its own initiative is justified.
30  Paragraph 47(2A)(c)
Omit “or the Income Tax Assessment Act 1997”, substitute “, the Income Tax Assessment Act 1997 or Division 48 in Schedule 1 to the Taxation Administration Act 1953”.
31  At the end of subsection 47(2A)
Add:
Note:	Division 48 in Schedule 1 to the Taxation Administration Act 1953 is about crediting the R&D tax offset on a quarterly basis.
Part 3—Other amendments
Income Tax Assessment Act 1936
32  After subsection 262A(2AAE)
Insert:
	(2AAF)	Subsection (1) applies to an entity for whom a varied amount applies under section 48‑210 in Schedule 1 to the Taxation Administration Act 1953 even if the entity is not carrying on a business.
Income Tax Assessment Act 1997
33  Subsection 63‑10(1) (table item 40)
Repeal the item, substitute:
40	*Tax offset:
(a) that is subject to the refundable tax offset rules (see Division 67); and
(b) for which you are not participating in the *quarterly credits system for any *instalment quarter in the income year	You can get a refund of the remaining amount	
42	*Tax offset:
(a) that is subject to the refundable tax offset rules (see Division 67); and
(b) for which you are participating in the *quarterly credits system for at least one *instalment quarter in the income year	You can get a refund of the remaining amount	
34  Subsection 355‑100(1) (table item 2)
Before “an *exempt entity”, insert “at any time during the income year”.
35  Subsection 355‑705(1)
Omit all the words after “the finding binds the Commissioner”, substitute:
for the purposes of:
	(c)	assessments of the R&D entity for the income year or years (as appropriate); and
	(d)	for a finding under section 28E of that Act—the R&D entity’s participation in the *quarterly credits system for the *instalment quarters in the income years.
36  Subsections 355‑705(2) and (3)
Repeal the subsections, substitute:
Advance findings about activities yet to be completed
	(2)	If:
	(a)	*Innovation Australia makes a finding under subsection 28A(1) of the Industry Research and Development Act 1986 about all or part of an activity; and
	(b)	Innovation Australia gives the Commissioner a certificate under that Act setting out the finding; and
	(c)	the activity is being conducted, or is yet to be conducted, during the income year applying under subsection 28A(3) of that Act for the finding;
the finding binds the Commissioner for the purposes of:
	(d)	assessments of the R&D entity for the income year and the next 2 income years; and
	(e)	the R&D entity’s participation in the *quarterly credits system for the *instalment quarters in the income year or in the next 2 income years.
Advance findings about completed activities
	(3)	However, if that activity is completed during the income year applying under subsection 28A(3) of that Act for that finding, that finding binds the Commissioner for the purposes of:
	(a)	assessments of the R&D entity for the income year; and
	(b)	the R&D entity’s participation in the *quarterly credits system for the *instalment quarters in the income year.
37  Subparagraph 355‑710(1)(a)(iii)
Repeal the subparagraph, substitute:
	(iii)	a finding under section 28A or 28C of that Act about an R&D entity and all or part of an activity conducted or to be conducted during one or more income years; or
38  Subsection 995‑1(1)
Insert:
quarterly credit amount has the meaning given by section 48‑200 in Schedule 1 to the Taxation Administration Act 1953.
39  Subsection 995‑1(1)
Insert:
quarterly credit due day has the meaning given by section 48‑235 in Schedule 1 to the Taxation Administration Act 1953.
40  Subsection 995‑1(1)
Insert:
quarterly credits system means the system described in Division 48 in Schedule 1 to the Taxation Administration Act 1953 for providing quarterly credits during an income year for certain *tax offsets to which entities expect to be entitled for the income year.
41  Subsection 995‑1(1) (definition of tax offset refund)
After “item 40”, insert “or 42”.
Taxation Administration Act 1953
42  Subsection 8AAB(4) (after table item 44)
Insert:
44A	48‑230 in Schedule 1	Taxation Administration Act 1953	negative quarterly credit amounts	
44B	48‑305 in Schedule 1	Taxation Administration Act 1953	part of debit exceeding total tax offset refunds	
44C	48‑350 in Schedule 1	Taxation Administration Act 1953	excess quarterly credit amount worked out using varied amounts	
44D	48‑420 in Schedule 1	Taxation Administration Act 1953	quarterly credit amounts for quarters for which you no longer participate	
43  Subsection 250‑10(2) in Schedule 1 (after table item 135)
Insert:
135A	negative quarterly credit amounts	48‑230 in Schedule 1	Taxation Administration Act 1953	
135B	debit equal to total quarterly credit amounts paid	48‑300 in Schedule 1	Taxation Administration Act 1953	
135C	quarterly credit amounts for quarters for which you no longer participate	48‑420 in Schedule 1	Taxation Administration Act 1953	
44  Subsection 286‑75(2) in Schedule 1
After “these Acts”, insert “or provisions”.
45  At the end of subsection 286‑75(2) in Schedule 1
Add:
	; or (d)	subsection 48‑405(1) in this Schedule.
46  Paragraph 298‑5(c)
After “Division 16”, insert “or 48”.
47  Subsection 355‑65(4) in Schedule 1 (table item 6)
Repeal the item, substitute:
6	*Innovation Australia	is for the purpose of administering any *Commonwealth law relating to:
(a) venture capital; or
(b) research and development (including related tax incentives).	
Taxation (Interest on Overpayments and Early Payments) Act 1983
48  After Part IIIAA
Insert:
Part IIIAB—Interest on delayed payments under quarterly credits system
  
12BA  Definitions
		In this Part:
assessment day means the day the Commissioner makes an assessment (within the meaning of the Income Tax Assessment Act 1997):
	(a)	of the total of the entity’s tax offset refunds (within the meaning of the Income Tax Assessment Act 1997) for the year of income for which the quarterly credit amount is payable; or
	(b)	that the entity can get no such refunds for that income year.
due day, for a quarterly credit system amount, means:
	(a)	if the amount is a quarterly credit amount (within the meaning of the Income Tax Assessment Act 1997)—the amount’s quarterly credit due day (within the meaning of that Act); or
	(b)	if the amount is an amount repayable under section 48‑425 in Schedule 1 of the Taxation Administration Act 1953—the last day the amount is repayable under that section.
instalment quarter has the same meaning as in the Income Tax Assessment Act 1997.
quarterly credit system amount means:
	(a)	a quarterly credit amount (within the meaning of the Income Tax Assessment Act 1997); or
	(b)	an amount repayable under section 48‑425 in Schedule 1 of the Taxation Administration Act 1953.
RBA has the same meaning as in section 8AAZA of the Taxation Administration Act 1953.
RBA surplus has the same meaning as in section 8AAZA of the Taxation Administration Act 1953.
12BB  Interest for late refunds of RBA surpluses after amounts become payable
	(1)	If:
	(a)	a quarterly credit system amount is payable to an entity; and
	(b)	the Commissioner has allocated that amount to an RBA of the entity; and
	(c)	on that amount’s due day, the Commissioner is required under subsection 8AAZLF(1) of the Taxation Administration Act 1953 to refund to the entity an RBA surplus for that RBA; and
	(d)	the refund takes place after that due day;
then interest is payable by the Commissioner to the entity on the amount refunded.
	(2)	Interest under this Part is payable for the period:
	(a)	starting on the day after that due day; and
	(b)	ending at the earlier of:
	(i)	the day the refund takes place; and
	(ii)	the assessment day.
12BC  Interest for late payments of amounts
	(1)	If:
	(a)	a quarterly credit system amount is payable to an entity; and
	(b)	the Commissioner has not allocated that amount to an RBA of the entity; and
	(c)	the Commissioner pays that amount to the entity after that amount’s due day;
then interest is payable by the Commissioner to the entity on that amount.
	(2)	Interest under this Part is payable for the period:
	(a)	starting on the day after that due day; and
	(b)	ending at the earlier of:
	(i)	the day that amount is paid to the entity; and
	(ii)	the assessment day.
12BD  Rate of interest
		Interest under this Part is payable at the base interest rate (within the meaning of the Income Tax Assessment Act 1997).
Tax Laws Amendment (Research and Development) Act 2011
49  Subsection 2(1) (table item 7)
Omit “Schedules 3A and 4”, substitute “Schedule 4”.
50  Schedule 3A
Repeal the Schedule.
Part 4—Application and transitional provisions
  
51  Application of amendments
(1)	The amendments made by this Schedule (other than item 34) apply in relation to instalment quarters starting on or after 1 January 2014.
(2)	The amendment made by item 34 (about exempt entities) applies in relation to assessments for income years starting on or after 1 July 2013.
(3)	Despite subitem (1), paragraph 28A(3)(b) of the Industry Research and Development Act 1986 (as inserted by this Schedule) applies in relation to processes for making findings that start in the 2013‑14 income year and later income years.
52  Transitional—current findings of Innovation Australia
(1)	This item applies to a finding of the Board if:
	(a)	the finding was made under subsection 28A(1), 28C(1) or 28E(1) of the Industry Research and Development Act 1986; and
	(b)	the finding was in force immediately before the commencement of this item.
(2)	The finding has effect, after the commencement of this item, as if it had been made under that subsection as amended by this Schedule.