Re: No speedrail, Badgerys creek or Kurnell

[presterjohn16@my-deja.com]

Dave,

really roughly, the way a tax concession works is that if I spend $1m
on a head of expenditure, say R&D, and I have a tax bill of $5m
overall, on a 150% R&D tax concession I would get $1.5m off that bill,
so I'd only be paying $3.5m in tax.

Now you can see the problem.  It would be in my interest, and that of
my consultants [who get a percentage], to maximise my R&D expenditure.
So if I 'found' an extra $.5m of R&D  (total of $1.5m R&D) the
deduction off my tax bill is $2.25m.

This is the case whether the tax concession is set at an incentive rate-
over 100%, or at a flat 100%.

With thousands of companies doing this, the cost to revenue can be
enormous.

R&D Syndication got abused more than the regular concession because the
fairly complex set of transactions in a syndicate involved a core
technology transfer [based on hugely optimistic valuations] which
artificially inflated the amount of eligible R&D expenditure, usually
into the multi millions.  And syndicates got private rulings from the
ATO which guaranteed that the arrangement was OK and would not be
challenged down the track.

If Speedrail were approved I could see them quite easily claiming the
first four trainsets as 'prototypes' under the existing 125% R&D
concession.  The R&D definition is very loose and courts tend to favour
the beneficiary in these cases.

PJ



>
> My understanding of the "tax concession" scheme is that if a business
earns
> a profit of (to pluck a figure out of thin air) $10 million dollars,
and is
> thereofre subject to income tax of $4.9 million, that $4.9 million is
> waived. Which is ok, because if the scheme had not gone ahead, the
profit
> would never have been made in the first place, so the $4.9 million in
income
> tax would never ever have been owing to the government.
>
> The $4.9 million is instead used to repay the debt of the enterprise,
thus
> ensuring it reaches true profitability that much earlier.
>
> I cannot see how this is a bad thing.
>
> Dave
>
>


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