More Australians are in work than ever before, and the unemployment rate is now forecast to reach 3¾ per cent in 2022, the lowest rate in close to 50 years.

Risks to the outlook remain, with the pandemic and the invasion of Ukraine all putting pressure on the cost of living for Australian households.

As part of the Budget 2022‑23, the government is:

• providing temporary and targeted cost of living relief for households and tax relief for small businesses,
• delivering more jobs and working towards an unemployment rate below 4 per cent,
• making record investments in health, education, and other essential services,
• building roads, rail, dams, and the renewable energy technology required for our future, and
• investing in stronger defence, borders, and security.

Cost of living relief

The government is introducing a new temporary, targeted, and responsible Cost of Living Package to take the pressure off household budgets.

• One-off Cost of Living Tax Offset – From 1 July this year, more than 10 million individuals will receive a one-off $420 cost of living tax offset. As a result, eligible low- and middle-income earners will be up to $1,500 better off for a single income household or $3,000 better off for a dual-income household.
• One-off Cost of Living Payment – To help Australians most in need, the government is providing a one-off, income-tax-exempt payment of $250 to 6 million eligible pensioners, welfare recipients, veterans, and eligible concession card holders in April 2022.
• Temporary fuel excise relief – The Government will reduce fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre. The reduction in excise will flow through to lower petrol prices over the next two weeks, as petrol stations replenish their stocks.

Jobs

The government is investing in measures to expand and upskill the workforce to secure the workers we need now and for the future.

This will also help Australians into more highly skilled and better-paying jobs.

• The government is transforming Australia’s manufacturing sector and building resilient supply chains with over $1 billion in new investment, building on the $1.5 billion Modern Manufacturing Strategy announced in the 2020-21 Budget.
• The government has committed $2.8 billion to support Australian apprenticeships, building on the $13.3 billion spent on apprenticeships and traineeships since 2013.
• The government has committed $3.7 billion in Commonwealth funding for a new skills agreement, which has the capacity to deliver up to 800,000 additional training places for Australians.
• To develop the next generation of innovative Australian companies, this Budget includes $2.2 billion for a research commercialisation action plan (including $1.6 billion for a new economic accelerator) to bring industries and universities together.

Backing small businesses

Small businesses will have access to a new 20 per cent bonus deduction for eligible external training courses for upskilling employees.

The Skills and Training Boost will apply to expenditure incurred from Budget night until 30 June 2024, providing $550 million in tax relief.

The government is also providing $1 billion for a new Technology Investment Boost to encourage small businesses to go digital.

Small businesses will be able to deduct a bonus 20 per cent of the cost of expenses and depreciating assets that support digital uptake.

This new measure will support spending up to $100,000 per year, which applies from Budget night until 30 June 2023.

Essential services

The government has allocated $6 billion for the COVID-19 Health response, including support for the Governments’ Winter Response Plan to prepare for the next wave of COVID‑19 and influenza.

• $3.0 billion over five years for cheaper medicines to support a healthier Australia.
• $1.3 billion to support the delivery of the next National Plan to End Violence against Women and Children 2022-32.
• $165.0 million for wellbeing programs and $104.2 million for health services to support veterans and families

Infrastructure

The government is investing an unprecedented $37.9 billion in regional Australia and priority infrastructure across the nation to create jobs and unlock the economic potential in our regions.

This includes $7.1 billion for transformative investments, including in the Northern Territory, North and Central Queensland, the Pilbara, and the Hunter, to unlock new economic frontiers of production in agriculture, low emissions manufacturing, and renewable energy.

The government has increased its 10-year transport infrastructure pipeline to a record $120 billion, with an additional $17.9 billion committed to road, rail and community infrastructure projects supporting around 40,000 jobs.

Through its $8.9 billion National Water Grid Fund, the government will provide a further $7.4 billion to improve Australia’s water security and open new land for irrigation.

As well as projects in each state and territory, the government is investing:

• $2.0 billion through the Regional Accelerator Program to drive growth and productivity in regional areas.
• $501.7 million for local councils to deliver priority road and community infrastructure projects across Australia
• $2.0 billion in additional funding for the Northern Australia Infrastructure Facility, bringing total funding to $7.0 billion.

Keeping Australians Safe

We are living in a time of uncertainty.

The pandemic, the invasion of Ukraine and extreme weather events have and continue to cause enormous disruption.

To keep Australians safe, the government will:

• Increase the Australian Defence Force by up to 18,500 by 2040.
• Provide $9.9 billion over 10 years to significantly enhance Australia’s offensive and defensive cyber and intelligence capabilities.
• Support households and businesses impacted by recent floods in parts of Queensland and New South Wales, with over $6 billion expected to be spent.

The Budget aims to deliver the next stage of the government’s plan to build a strong economy and a stronger future.

COMMENTARY FROM BUSINESS LEADERS

While welcoming low unemployment figures, Business Council of Australia Chief Executive Jennifer Westacott expressed concern over labour shortages and the need to encourage skilled migration.

Australian Chamber of Commerce and Industry CEO Andrew McKellar said

‘We are without a long-term agenda for Australia to realise its economic potential”.

He made similar comments about the need for more skilled migrants going on to say

“Regrettably, this year’s Budget doesn’t address some of the more pressing challenges facing the Australian economy, including a far-reaching agenda for Tax Reform, stronger focus on innovation, and building business investment, supply chain capability and productivity. Presumably, these will have to wait until next year”.

ECONOMIC POSITION

The government maintains its plan for a stronger future is working and that the Australian economy has outperformed all major advanced economies, experiencing a stronger recovery in output and employment compared to pre-pandemic levels.

Economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending.

Real GDP is expected to grow by 4¼ per cent in 2021‑22, 3½ per cent in 2022-23 and 2½ per cent in 2023-24.

The unemployment rate is at 4 per cent, and this Budget will see it go even lower, delivering more jobs and higher wages.

The unemployment rate is forecast to reach 3¾ per cent in late 2022, nearly 3 percentage points below the Budget forecast from 2 years ago and the lowest rate in close to 50 years.

The strong labour market is expected to see wages growth accelerate to its fastest pace in almost a decade, with wage growth forecast to increase from 2¾ per cent in 2021‑22 to 3¼ per cent in 2022-23.

Since MYEFO, the underlying cash balance has improved by a substantial $103.6 billion over the 5 years to 2025‑26.

The Budget shows the deficit more than halving to 1.6 per cent of GDP by 2025-26 before falling to 0.7 per cent of GDP by the end of the medium term.

Consistent with the Fiscal Strategy, the stronger economy and smaller deficits are expected to see gross debt as a share of the economy peak at 44.9 per cent of GDP at 30 June 2025, 5.4 percentage points lower and 4 years earlier than at MYEFO.

Gross debt is then projected to fall to 40.3 per cent of GDP by the end of the medium-term, 9.6 percentage points, or $236 billion lower than at the end of the medium-term in the 2021-22 MYEFO.

Despite having faced the largest economic shock since the Great Depression, Australia’s debt to GDP levels, even when they peak, are still low by international standards, below all major advanced economies and less than half that of the United States and Japan.

The government’s economic plan is working, with Australia one of only 9 countries to maintain a AAA credit rating from major rating agencies.

The 2022‑23 Budget sets out the next stage of our plan for a stronger future.

ONE-OFF COST OF LIVING TAX OFFSET

From 1 July this year, over 10 million individuals will receive a one-off $420 cost of living tax offset. Combined with the low- and middle-income tax offset (LMITO), eligible low- and middle-income earners will receive up to $1,500 for a single income household or up to $3,000 for a dual-income household.

Case Study

Kate and Dan live together in their house in Toowoomba. Dan works in construction and earns $63,000 in 2021‑22, and Kate works as an emergency nurse earning $90,000 in 2021‑22. With the one-off cost of living tax offset, Kate and Dan will receive a total reduction in their tax liability of $3,000 when they lodge their tax return, $840 more than they would have received without the increase. With the cost of living tax offset, and the Government’s Personal Income Tax Plan, Kate and Dan will pay $5,295 less tax when compared to 2017‑18 tax settings.

Comment

Enjoy while you can…

While taxpayers will undoubtedly be grateful for this tax relief, this is confined to the year ending 30 June 2022. Of course, the “one-off” tax benefit of $420 will not continue, and LMITO will not continue until 2022-23.

The one-off cost of living payment

To help Australians meet the cost of living pressures, the government is providing a one-off, income tax-exempt payment of $250.

This payment will help 6 million people at a cost of $1.5 billion.

More than half of those who will benefit are pensioners.

It will be paid automatically to all eligible pensioners, welfare recipients, veterans, and eligible concession card holders in April 2022.

This is on top of the higher income support payments from existing indexation arrangements. Income support payments increased by 2.1 per cent in March 2022, benefiting almost 5 million Australians. The Age Pension, Disability Support Pension and Carer Payment rates increased by more than $20 a fortnight for singles and $30 a fortnight for couples. They will receive a similar increase again in September. Payments are regularly increased to help shield people from the rising cost of living.

Case Study

Kath and Marilyn are a retired couple who live together and are both Age Pension recipients. Kath and Marilyn will each receive a one-off cost of living payment of $250, so their household will receive $500 in April 2022. Their combined pension will also be more than $390 higher over the next six months before it is increased again.

TEMPORARY FUEL EXCISE RELIEF

Cost of living relief at the petrol pump

The Russian invasion of Ukraine has seen fuel prices increase, adding to the cost of living pressures families face and the cost of doing business for small businesses.

The government is taking decisive, responsible, and temporary action to cut fuel excise and reduce the pressure of high fuel prices on household budgets.

As part of Australia’s plan for a stronger future, the government will reduce fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre.

Fuel subject to a lower excise rate is expected to flow through to the majority of service stations and Australian consumers within a few weeks as stations replenish their stocks.

Case Studies

Viv is a teacher and commutes to the classroom with her small petrol hatchback. On average, she needs to fill her tank of 40 litres once every week. Under the changes, Viv would be expected to save up to $10 in excise and GST per tank of fuel or up to $250 over the 6-month period.

Morgan owns a small electrical business that employs 10 people. They each drive Utes with 80L fuel tanks. Under the changes, Morgan’s business would save a combined total of up to $215 in excise and GST expenses at the bowser when filling up all 11 vehicles. If this business filled all 11 cars on a fortnightly basis, the business would save up to $2,780 in excise and GST expenses over the 6-month period.

TAX RELIEF TO SUPPORT INVESTMENT AND CREATE JOBS

The coalition maintains its record on providing relief to small businesses is as follows:

Cutting taxes for small businesses

• Reduced the company tax rate for small businesses from 30 per cent in 2013‑14 to 25 per cent from 2021‑22.
• Introduced the unincorporated small business tax discount and lifted the rate from 5 per cent in 2015‑16 to 16 per cent from 2021‑22 (up to a cap of $1,000).
• Combined, these changes will deliver more than $21 billion in tax cuts to small businesses from 2015‑16 to 2024‑25, with around $2.6 billion flowing in 2022‑23.

Encouraging business investment and supporting cash flow

• Reducing the GDP uplift rate for 2022‑23, delivering $1.85 billion in cash flow support for 2.3 million taxpayers, including small businesses.
• Introduced rules to allow businesses with annual turnover or total income less than $5 billion to instantly write off assets to strengthen business investment and create more jobs and extended them to 30 June 2023.
• Enabled companies with an annual turnover of less than $5 billion to offset losses against previously taxed profits to generate a refund and extended it to include the 2022‑23 income year.

Greater access to tax concessions

• Expanded access to 10 small business tax concessions by lifting the annual turnover threshold from $10 million to $50 million, providing tax relief and reducing red tape.

Incentives to upskill staff

The government is continuing to deliver for small businesses by introducing the Skills and Training Boost.

Small businesses with an annual turnover of less than $50 million will have access to a new bonus 20 per cent deduction for the cost of external training courses delivered to their employees by providers registered in Australia.

The boost will apply to eligible expenditures incurred from Budget night until 30 June 2024, such as a cyber security course delivered by a registered training provider.

This initiative will provide $550 million in tax relief for small businesses, supporting them in investing in their employees and growing their business.

Case Study

Andrew owns a transport company, Distribute R Us Pty Ltd, that has an annual turnover of $30 million and 120 employees.

In April 2022, Distribute R Us pays for a registered training provider to upskill their employees to run supply chain training courses, costing $200,000.

Distribute R Us pays for its employees to undertake specialist logistics training, costing a further $400,000, across the 2022‑23 and 2023‑24 income years.

Under the government’s new Skills and Training Boost, Distribute R Us can claim a bonus deduction of $120,000, reducing its tax bill by $30,000. This is extra money that Distribute R Us can use to reinvest and grow the business.

SUPPORTING BUSINESSES TO GO DIGITAL

Lifting digital capability and adoption to boost productivity

The government is providing $1.0 billion to support small businesses to go digital by introducing the Technology Investment Boost.

Small businesses with an annual turnover of less than $50 million will have access to a new bonus 20 per cent deduction for the cost of expenses and depreciating assets that support digital uptake, up to $100,000 of expenditure per year.

Around 3.6 million small businesses are eligible to access the new boost, which will apply from Budget night until 30 June 2023.

These changes will benefit small businesses by supporting them to invest in items such as an online sales platform, cyber security enhancements, cloud computing and digital tracking for livestock.

The government is also investing in digital capabilities through its Digital Economy Strategy. This will support businesses in boosting productivity, becoming more globally competitive, and generating rewarding and high-paying jobs.

Case Study

Harley owns a furniture manufacturing company, Star Sofas Pty Ltd, that has an annual turnover of $35 million and 120 employees.

In April 2022, as part of an overseas expansion, Star Sofas invested $100,000 to develop an online presence and build a digital inventory tracking system.

In July 2022, Star Sofas purchases multiple software subscriptions to enhance customer data analytics and marketing. Star Sofas incurs a total expenditure of $100,000.

The government’s new Technology Investment Boost means that Star Sofas can deduct an extra $40,000, reducing their tax bill by $10,000. The company can use the extra money to reinvest and grow.

PERSONAL TAXATION MEASURES

The government will deliver tax relief to help Australians with rising cost of living pressures.

Through the legislated Personal Income Tax Plan, an estimated $40 billion in tax relief has flowed to households since the start of the pandemic.

The new cost of living offset, together with the low- and middle-income tax offset (LMITO) for 2021‑22, will provide around $12 billion in support when taxpayers lodge their tax returns from 1 July 2022.

This is on top of around $16 billion in permanent tax relief that will flow to households in 2022-23.

In 2022-23, more than 12 million taxpayers are expected to benefit from lower taxes under the plan, worth up to $2,565 for individuals or $5,130 for dual-income couples.

As a result of the Personal Income Tax Plan, an individual earning $90,000 each year, around the average full-time income, will benefit by a total reduction in tax of $8,655 from 2018‑19 to 2022‑23. By putting more money in their pockets, families will keep more of what they earn, allowing them to spend more on what they need.

When Stage 3 of the plan delivers further tax cuts in 2024‑25, around 95 per cent of taxpayers will face a marginal tax rate of 30 per cent or less. This aims to simplify the tax system, improve incentives for working Australians and increase rewards for effort.

Case Study

Sangeetha works as a web programmer, and her husband Mitchell works as a city planner for the local council. Sangeetha and Mitchell earn $86,000 and $92,000, respectively. In 2022‑23, Sangeetha and Mitchell together will pay $2,385 less than they would have paid without the Government’s Personal Income Tax Plan. In 2024-25, with Stage 3 of the plan, Sangeetha and Mitchell will see a further $2,200 reduction in their tax bill if they earn the same income, leaving them $4,585 better off.

PLANNING

CASH FLOW SUPPORT AND RED TAPE REDUCTION TO HELP SMALL BUSINESSES

As part of the 2022-23 Budget, the government has announced a package of measures to slash red tape and boost the cash flow of more than 2.3 million small businesses and sole traders.

These measures generate an annual compliance saving of $800 million every year, money that businesses can use to invest, innovate, and create more jobs for Australians.

Lowering tax instalments in 2022-23

The government will set the GDP uplift rate that applies to pay-as-you-go (PAYG) instalments and GST instalments to two per cent for the 2022-23 income year. This rate is significantly lower than the 10 per cent rate that would have applied under the statutory formula.

A lower uplift rate will mean lower instalments, delivering $1.85 billion in cash flow support for 2.3 million small to medium businesses, sole traders, and individuals with passive income (including some self-funded retirees) that are eligible to use the instalment amount method.

This measure will apply to the 2022-23 income year in respect of instalments that fall due after the enabling legislation receives Royal Assent.

Aligning instalment payments with financial performance

The 2022-23 Budget includes new measures to leverage technology to automate tax reporting requirements and align instalment payment obligations with financial performance. These measures will reduce compliance costs, improve processing times, and support cash flow management for SMEs.

Improved cash flows through an improved pay as you go instalment system

The government is also supporting companies to manage cash flows by allowing companies to calculate PAYG instalments based on financial performance. If financial performance declines, companies may be able to get refunds of instalments paid automatically.

The measure will initially support over 500,000 companies with PAYG instalment obligations.

New systems to implement this measure are expected to be in place by 31 December 2023 for implementation by 1 January 2024.

Facilitating pre-filling of payroll tax returns through data sharing

The government will facilitate sharing single touch payroll data with State and Territory Governments on an ongoing basis to cater for pre-filling payroll tax returns. This will facilitate further investments by States and Territories in their own systems to improve lodgement accuracy, reduce compliance costs and save time for the approximately 170,000 businesses that have payroll tax reporting obligations.

New South Wales, Victoria, Western Australia, South Australia, Queensland, and the Australian Capital Territory are already participating in a trial data transfer to understand how STP data can deliver benefits to their payroll-tax clients.

The government is on track to complete its IT system implementation by late 2023.

Smarter reporting of taxable payments

The government will allow eligible businesses the option to report taxable payments reporting system data via software at the same time as activity statements. Businesses that opt into automatic reporting will no longer need to invest time and money filling out the yearly Taxable Payments Annual Report.

Currently, approximately 190,000 businesses that contract for services relating to building and construction, cleaning, road freight and courier, security, investigation, surveillance, or information technology services are required to fulfil this obligation on an annual basis.

New systems are expected to be in place by 31 December 2023 for implementation by 1 January 2024.

Digitalising trust income reporting

The government will develop systems to ensure all trusts will have the option to lodge income tax returns electronically. Digitalising the reporting of trustee and beneficiary obligations will reduce errors and processing times and create the capacity to pre-fill beneficiaries’ tax returns.

This measure will facilitate electronic lodgement for up to 30,000 trusts currently lodging by paper. There are just under 1 million trusts and around 1.8 million beneficiaries in the Australian tax system.

New systems are expected to be in place by 1 July 2024.

Aligning the excise and other reporting requirements

The government is lowering the costs of doing business for manufacturers, importers and distributors in the alcohol and fuel sectors by enabling businesses with an annual turnover of less than $50 million to lodge and pay excise and excise-equivalent customs duty on a quarterly basis from 1 July 2023.

Currently, most of these businesses report monthly, with some reporting weekly. The new quarterly lodgement schedule will better align with the reporting and payment schedule of other indirect taxes, with returns and payments required no later than the 28th day of the month after the end of each quarter.

SUPPORT TO INCREASE APPRENTICESHIPS

The Federal Budget involves a $365.3 million investment that will support an extra 35,000 apprentices, and trainees get into a job.

The extension of the successful Boosting Apprenticeship Commencements and Completing Apprenticeship Commencements wage subsidies aim to build on the record number of Australians currently in trades training.

According to Prime Minister Scott Morrison

Right now, there are more than 350,000 apprentices and trainees in training, and a record 220,000 of these are trade apprentices. These investments are about making those numbers go even higher.

Enrolments for the Boosting Apprenticeship Commencement wage subsidy, which provides employers with 12 months of wage subsidy support, are being extended to the end of the 2021-22 financial year (30 June 2022).

Any business that receives the Boosting Apprenticeship Commencement (BAC) wage subsidy will be eligible for extended support through the Completing Apprenticeship Commencements (CAC) wage subsidy for the second and third years of a Boosting Apprenticeship Commencement-supported apprenticeship.

As of 24 March 2022, over 73,000 businesses have been supported to put on an apprentice or trainee through Boosting Apprenticeship Commencements subsidy.

Any employer who takes on an apprentice or trainee up until 30 June 2022 can gain access to:

• 50 per cent of the eligible Australian Apprentice’s wages in the first year, capped at a maximum payment value of $7,000 per quarter per Australian Apprentice,
• 10 per cent of the eligible Australian Apprentice’s wages in the second year, capped at a maximum payment value of $1,500 per quarter per Australian Apprentice, and
• 5 per cent of the eligible Australian Apprentice’s wages in the third year, capped at a maximum payment value of $750 per quarter per Australian Apprentice.

ASSISTANCE TO ASPIRING HOMEOWNERS

The Federal has increased its successful Home Guarantee Scheme in the 2022‑23 Budget.

To date, almost 60,000 Australians have benefited from the scheme. The Federal Government is expanding the Home Guarantee Scheme to make available up to 50,000 places each year. This includes a new Regional Home Guarantee open to non-first home buyers, enabling even more Australians to achieve their aspirations of owning a home.

Under the expanded Home Guarantee Scheme, the government will make available:

• 35,000 guarantees each year, up from the current 10,000, from 1 July 2022 under the First Home Guarantee, to support eligible first home buyers to purchase a new or existing home with a deposit as low as five per cent.
• 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee to support eligible homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas, subject to the passage of enabling legislation; and
• 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee announced in last year’s Budget. Australia’s first-ever specifically targeted single-parent family housing scheme supports eligible single parents with children to buy their first home or re-enter the housing market with a deposit of as little as two per cent.

The Home Guarantee Scheme ensures that part of an eligible buyer’s home loan is guaranteed by the government, enabling Australians to buy a home sooner with a smaller deposit and without paying lenders’ mortgage insurance.

The scheme has particularly supported women and front-line workers, with one in five guarantees issued to essential workers, almost 35 per cent of which were nurses and 34 per cent were teachers.

Of total guarantees issued, 52 per cent of guarantees went to women, well above the market average of 41 per cent women, while single mums took up 85 per cent of Family Home Guarantees.

EMPLOYEE SHARE SCHEMES

The government aims to increase the utility of employee share schemes as a tool for certain Australian businesses to incentivise their employees. Unlisted companies will be able to make larger offsets to participants, which would allow them, in some cases, to invest up to $30,000 each per year, plus 70 per cent of dividends and cash bonuses.

Regulatory requirements will also be removed for offers made to independent contractors issued with shares or options that they do not have to pay for.

SUPERANNUATION

While there were no major changes to Superannuation, the following should be noted:

• The 50% reduction of the minimum superannuation pension drawdown requirements will be extended for the 2022-23 income year. Given the ongoing volatility in financial markets, this measure will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
• The Super Guarantee rate will continue to rise to 10.5% for 2022-23. The Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23.

BUSINESS TAX INCENTIVES

Enhanced Paid Parental Leave initiative

To be introduced no later than 1 March 2023, the expanded initiative will see 20 weeks of paid leave accessible to either parent during the first two years of their child’s birth or adoption and a widening of eligibility based on a household income threshold of $350,000.

Extension of ATO Tax Avoidance Taskforce (Taskforce)

The Taskforce, formed in 2016, has been extended for a further 2 years to 30 June 2025 with a renewed period of funding to continue tax assurance and compliance activities targeted at multinational enterprises, large public and private businesses (and associated individuals). The government anticipates the extension of the Taskforce will increase receipts by $2.1 billion and increase payments by $652.6 million over the forward estimates period.

Expansion of the Patent Box regime

The government will expand the patent box regime to the agricultural sector and low emissions technology innovations. Eligible corporate income will be subject to an effective income tax rate of 17 per cent for patents granted or issued after 29.5.2022 and for income years starting on or after 1.7.2023.

The patent box regime for Australian medical and biotechnology innovations will now allow patents granted or issued after 11.5.2021 to be eligible for the patent box regime. Formerly this only covered patents which were applied for after 11.5.2021. The government will also now allow standard patents granted by IP Australia, utility patents issued by the United States Patent and Trademark Office, and European patents granted under the European Patent Convention to be eligible to the extent R&D occurs in Australia.