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This subject will address critical issues in the taxation treatment of activities relating to the development of new knowledge and products. Australia has a comprehensive but complex system that provides taxation concessions for expenditure on innovation, which this subject will examine in detail. The subject does not assume a tax background.
The general income tax and capital gains implications of income and expenditure in relation to the development of intellectual property, both domestically and internationally, will be considered. A key component of this subject is understanding the underlying policy drivers in Australia and other jurisdictions.
Principal topics include:
- What is research and development?
- The elements of intellectual property at general law and their impact on its taxation
- The source of intellectual property (IP) in an inter(net)connected world
- Research and development concessions and the regulatory regime
- The advantages of early stage innovation companies (ESICs) and early stage venture capital limited partnerships (ESVCLPs)
- The assessability of income from, and deductibility of expenditure on, the innovation of products and the development and exploitation of intellectual property
- The Base Erosion and Profit Shifting (BEPS)effect and transfer pricing of intellectual property
- Litigation of research and development disputes and their unique problems.
Intended learning outcomes
A student who has successfully completed this subject will:
- Have an advanced and integrated understanding of the R&D tax incentive, the object of the incentive and the relevance of the incentive to Australian companies, particularly start-ups
- Have a detailed understanding of the meaning of R&D activities and the considerations for entities to be entitled to an R&D offset
- Be able to critically examine, analyse, interpret a number of scenarios from a variety of industries to apply the principles of the R&D tax incentive to practical situations
- Have a detailed understanding of the regulatory frameworks that govern the R&D tax incentive and the dual track administration pathway overlaying the incentive
- Have an advanced understanding of Tax incentives for early stage investors in innovation companies and the timing implications for companies seeking ESIC designation
- Have an awareness of the Early stage venture capital limited partnership programme and its aims to stimulate the Australian early stage venture capital sector. Have an understanding of how the ESVCLP mechanisms provides the fund manager, flow-through tax treatment and for investors, tax exemptions on their share of returns
- Have an understanding of the global trends in innovation taxation measures and the relevance of these incentives in decision making for business leaders and entrepreneurs in Australia
- Have a developed awareness of the taxation treatments of relevant intellectual properties (IP) outside specific incentive regimes, in order to identify potential issues and benefits under the tax laws in relation to the development and exploitation of IP, including the role of integrity measures
- Have the cognitive and technical skills to independently examine, research and analyse existing and emerging legal and administrative issues relating to innovation tax incentives.
Last updated: 12 November 2022