Federal Register of Legislation - Australian Government

Primary content

Schemes as made
Provides for a scheme for issuing duty credits to motor vehicle producers who undertake eligible research and development activities.
Administered by: Industry
Registered 12 Sep 2005
Tabling HistoryDate
Tabled HR03-Aug-2004
Tabled Senate03-Aug-2004
Gazetted 24 Jun 2004
Date of repeal 19 Mar 2014
Repealed by Spent and Redundant Instruments Repeal Regulation 2014

I, IAN ELGIN MACFARLANE, Minister for Industry, Tourism and Resources, make this Scheme under subsection 60A (1) of the ACIS Administration Act 1999.

Dated 22 June 2004

IAN MACFARLANE


Contents

Reader’s Guide                                                                                                                3

Part                       Preliminary

                        1     Name of Scheme                                                                               10

                        2     Commencement                                                                                10

                        3     Object                                                                                              10

                        4     Definitions                                                                                         10

                        5     Eligible R&D activity and eligible R&D project                                       11

                        6     Eligible R&D expenditure                                                                    12

                        7     Allowed kinds of research and development                                          13

                        8     Amount of credits available under this Scheme                                     13

                        9     Intellectual property                                                                            13

                       10     Administration of Scheme                                                                   13

Part 2                    Issue of credits

Division 1                Application rounds

                       11     Application rounds                                                                             14

Division 2                Application for credits

                       12     Call for applications                                                                            14

                       13     Application for credits                                                                         14

Division 3                Assessment of applications

                       14     Decision — eligible R&D project                                                          15

                       15     Recommendation and ranking by Assessment Panel                            15

                       16     Decision on application                                                                      15

                       17     Amount of credits                                                                              16

                       18     Notice of decision and offer of credits                                                   16

                       19     Agreement with the Commonwealth                                                     17

                       20     Issuing credits                                                                                   17

Division 4                Merit criteria

                       21     Merit criterion 1: the calibre of new R&D activity that will be generated in Australia by the eligible R&D project                                                                                      18

                       22     Merit criterion 2: the technical merit of the eligible R&D project              18

                       23     Merit criterion 3: the level of benefit, including environmental benefit to the wider Australian community of the eligible R&D project                                                 19

                       24     Merit criterion 4: the contribution of the eligible R&D project to the sustainability of an internationally competitive automotive industry in Australia                                         20

                       25     Ranking                                                                                            20

Part 3                    Monitoring of projects

                       26     Annual assessment                                                                           21

                       27     Provision of information                                                                       21

                       28     Managing carryover of project overspends or underspends                     21

Part 4                    Variation of agreement

                       29     Variation of agreement                                                                       22

                       30     Return of credits                                                                                23

Part 5                    Claims by participants other than MVPs

                       31     Claims by participants other than MVPs                                              24

Part 6                    Miscellaneous

                       32     Publishing information                                                                        25

                       33     Assessment of performance of Scheme                                               25

                       34     Administrative review                                                                          25

 



 

Reader’s Guide

Background

1.         This Reader’s Guide is intended to assist readers of the Scheme. The Reader’s Guide is not part of the legislative Scheme and has no legal force.

2.         The Scheme is a legislative instrument made under the ACIS Administration Act 1999 (the Act). The Board, Department, Secretary and MVPs are bound by the Scheme. The Scheme is aimed at increasing the level of R&D activity undertaken by MVPs in Australia.

Summary of the Scheme

3.         On 13 December 2002 the Government announced details of the post-2005 tariff changes and the post-2005 assistance package for the Australian automotive industry. Part of these arrangements included a MVP R&D Scheme (the Scheme) to be established within the MVP component of the ACIS budget. The Scheme will:

(a)        begin on 1 January 2006 and conclude on 31 December 2010; and

(b)        offer up to $150 million to be paid as ACIS type J investment credits for R&D projects over the 5 years 2006-2010; and

(c)        be accessible to all MVPs registered under ACIS; and

(d)        be competitively-based; and

(e)        reward successful projects up to 45 cents for each dollar spent on eligible R&D; and

(f)         involve a minimum of 2 application rounds; and

(g)        limit total credits over the life of the Scheme for an individual MVP to $75 million.

4.         Ownership of the intellectual property in R&D projects will not affect the eligibility of an R&D project under the Scheme.

Application rounds

5.         There will be a minimum of 2 application rounds with not more that $90 million in credits issued in total in the first application round. All remaining credits will be available for allocation in the second round. After the second round, further rounds will only be held if $150 million in credits has not been issued in the first and second rounds.

6.         If the $150 million Scheme limit and the $90 million first round limit have not been reached, an MVP will continue to be eligible to apply for credits unless the MVP has already been issued credits to the value of $75 million. It is also intended that an issue of credits to an MVP will not be permitted if, in an ACIS year, the total amount of modulated credit, unmodulated uncapped production credit and unmodulated type J investment credit issued to the MVP has exceeded 5% of the sales value of the MVP’s ACIS goods and services in respect of the previous year (the credit limit) (see section 54 of the Act).

7.         Credits not issued by the end of 2010 will be treated as part of the general ACIS Stage 2 MVP pool.

Assessment of applications

8.         The Secretary will verify that proposed projects are eligible R&D projects. An Automotive Committee of the Industry Research and Development Board, or the Board itself (the Assessment Panel), will then provide recommendations to the Secretary including:

(a)        assessments of the relative merits of projects against the Scheme’s merit criteria; and

(b)        assistance in the monitoring process where there has been a project variation.

9.         The Secretary will have the final decision in determining which projects will receive credits under the Scheme. In making a decision on which projects are offered credits under the Scheme, the Secretary will consider factors including:

(a)        the merit ranking provided by the Assessment Panel; and

(b)        available credits; and

(c)        the amount of credits already issued to individual MVPs; and

(d)        the objective of the Scheme.

Administration of the Scheme

10.       The Department will undertake the day to day administration of the Scheme including the administration of the application and assessment process and monitoring the performance of participating MVPs against their agreements.

11.       The Department will also provide advice on project performance and may make recommendations to the Secretary.

12.       The Secretary will have responsibility for entering into and varying agreements.

Scheme Documentation

13.       All MVPs that wish to apply for credits for R&D projects under the Scheme will be required to complete and lodge an application form. MVPs will submit only 1 application per round, which may contain a number of proposed R&D projects. For each project within an application, the MVP must include the estimated R&D expenditure base for the first funding year of the project and the claims of the project against the merit criteria.  The R&D expenditure base for a year is the average of an MVP’s eligible R&D expenditure for R&D activities undertaken in Australia or overseas (other than funded projects) for the previous 3 years.

14.       An applicant’s portfolio of R&D activity will allow the determination of a base level of expenditure to assist the Assessment Panel in assessing projects under subsection 21 (2) of the Scheme. The Assessment Panel will assess the relative merits of each of the proposed projects included within each application.

15.       In order to receive credits, successful MVPs will be required to enter into an agreement with the Commonwealth which will, among other things, specify the terms, roles and responsibilities of both parties as they relate to selected projects.

Participation in the Scheme

16.       All MVPs registered under ACIS will be eligible to participate in the Scheme. Participation in the Scheme will be competitive. The eligibility criteria are broad, and only the highest ranked projects will receive credits. The Assessment Panel may decline to provide a merit ranking for a project.

17.       ACIS participants that are not MVPs will not be eligible to claim ACIS assistance for the activities claimed by MVPs under the Scheme.

18.       There are 3 distinct levels of R&D under the Scheme.

·          Eligible R&D projects, defined in subsections 5 (2), (4) and (5) of the Scheme.

·          Eligible R&D activities, defined in subsection 5 (1) of the Scheme. An eligible R&D project must include at least 1 eligible R&D activity, and may include other activities that are not eligible activities.

·          Eligible R&D expenditure, defined in section 6 of the Scheme. Eligible R&D expenditure relates to eligible R&D activities.

Examples of eligible R&D projects

1.   The conception, design and development of new motor vehicles for production in Australia, of a type or model not previously made in Australia by the MVP in the preceding 10 years.

2.   Contributing to environmental savings through vehicle weight reduction through the application of advanced product technologies such as light metals, composites and other designs.

3.   Contributing to environmental savings through the development and application of advanced powertrain technologies directed towards fuel economy or emissions improvement.

4.   The development and application of advanced vehicle safety technologies.

Merit Criteria

19.       For each of the application rounds, subject to the Assessment Panel’s power to decline to provide a merit ranking, each proposed project will be ranked by the Assessment Panel in order of merit in relation to all other projects in that round.

20.       The Assessment Panel will assess each project against 4 merit criteria:

(a)        the calibre of new R&D activity to be generated in Australia by proposed projects; and

(b)        the technical merit of the proposed activities; and

(c)        the level of benefit, including environmental benefit, to the wider Australian community of proposed projects; and

(d)        the contribution of proposed projects to the sustainability of an internationally competitive automotive industry in Australia.

21.       The criteria are mutually reinforcing and will be considered jointly.

22.       In determining merit rankings, the Assessment Panel may seek further information, in writing or through interviews, from all or some MVPs. The MVP will be responsible for meeting all costs associated with providing information to the Assessment Panel.

Merit Criterion 1: calibre of new R&D activity to be generated in Australia by proposed projects

23.       Under this criterion, projects will be assessed by the Assessment Panel according to the calibre of new R&D activity that will be undertaken in the projects. R&D projects that may involve higher technical risk will be regarded more highly than projects that involve further development of current lines of R&D or new lines of R&D that are part of an applicant MVP’s existing expenditure base.

24.       It is envisaged that a project described in paragraph 21 (2) (a) or (b) of the Scheme would not be viable without credits under the Scheme.

Merit Criterion 2: the technical merit of the proposed projects

25.       Under this criterion, projects will be assessed by the Assessment Panel according to the technical merit of the R&D to be undertaken in the projects. 

Merit Criterion 3: the level of benefit, including environmental benefit to the wider Australian community of proposed projects

26.       Under this criterion, projects will be assessed by the Assessment Panel according to the economic and environmental benefits likely to accrue from the proposed R&D. Economic benefits include benefits that arise from the dissemination of new knowledge and techniques through the automotive industry and wider economy. Examples of environmental benefits include emission reduction, fuel consumption improvements and waste minimisation.

Merit Criterion 4: the contribution of proposed projects to the sustainability of an internationally competitive automotive industry in Australia

27.       Under this criterion, projects will be assessed by the Assessment Panel according to their contribution to the sustainability of an internationally competitive automotive industry. The project and the R&D undertaken should be part of a longer-term strategy for automotive operations in Australia. A project that is supported under the Scheme should be forward-looking and growth oriented.

Determination of assistance

Other Government funding

28.       Applications must identify all R&D activities taking place at the same time as proposed projects, including those that have received (or might receive) funding from other Commonwealth grants schemes and activities for which type C investment is claimed under the Act. Where proposed projects under the Scheme receive funding under other Commonwealth grant schemes, the value of that contribution will be deducted for the purpose of earning a payment under the Scheme, with the exception of forms of Commonwealth assistance that are not financial assistance for section 11 of the Act as detailed in the ACIS Administration (Commonwealth Financial Assistance) Determination 2000. An activity for which type C investment is claimed is not an eligible R&D activity under paragraph 5 (3) (m) of the Scheme.

Taxation

29.       MVPs that participate in the Scheme are not precluded from access to the R&D Tax Concession. However standard clawback provisions will apply and the MVP should include the value of the assistance received from its participation in the Scheme in its calculations of clawback when claiming the R&D Tax Concession in its company tax return. Advice on the operation of the R&D Tax Concession and clawback should be sought from a taxation adviser or the Australian Taxation Office.

Calculation of amount of duty credits

30.       It is intended that guidelines for working out the amount of unmodulated type J investment credit to be issued to an MVP in respect of a quarter will be included in the Scheme in the future.  

31.       It is intended that assistance provided under the Scheme to individual MVPs will be subject to the credit limit set out in section 54 of the Act, and that successful projects will be funded at 45% of eligible expenditure until the first round limit, MVP limit, Scheme limit or the credit limit is reached. If a project is to be funded at less than 45% of eligible expenditure as a result of 1 of the limits being reached, the MVP has the discretion to accept or reject the offer of credits if the funding level is seen to be insufficient.

32.       Successful projects will earn ACIS type J duty credits for R&D activities (type J investment) undertaken in Australia, and for up to a maximum of 20% of the eligible R&D expenditure for activities conducted overseas. Payments will be made quarterly in arrears.

33.       Eligible R&D expenditure for the Scheme may include expenditure incurred from 1 October 2005 until 30 September 2010.

Timing of issue of duty credits

34.       Once projects have been approved for credits, MVPs will be required to lodge information in an approved form as part of their quarterly returns within 45 days after the end of each quarter. This information will include particulars of type J investment undertaken by the MVP in that quarter and particulars of any other Commonwealth assistance received by the MVP in that quarter relating to funded projects. The quarterly return will allow the Department to determine the amount of ACIS type J duty credits that are payable. Once a quarterly return is lodged with the Department, it will be processed as soon as practicable.

Monitoring and assurance

35.       Credits under the Scheme will be made available on a calendar year basis (1 January to 31 December).

36.       As part of monitoring and payment processes, all information, including that submitted in applications to the Department, will need to be provided on a calendar year basis.

Annual assessment

37.       The performance of an MVP against all Scheme commitments will be assessed on an annual basis.

38.       Within 45 days after the end of the first funding year in which an MVP has received credits under the Scheme for a funded project, the MVP must give to the Department, details of the MVP’s R&D expenditure base for the year.

Variation of a project — application to Secretary

39.       An MVP that is not able to undertake all of the activity within an individual project that it has agreed to do must apply to have the Secretary consider a project variation.

40.       The Secretary may seek an assessment and a recommendation from the Assessment Panel in making a decision on the variation. If the Secretary approves the variation, a variation of the funding agreement will be made. If the Secretary does not approve the variation, all credits for the project will cease. It is intended that the Secretary will not approve a variation that involves an increase in funding for the project. Such a variation should be the subject of an application in a subsequent funding round.

Variation of a project without application to Secretary

41.       If, in the Secretary’s opinion, a variation of a project has been made without approval from the Secretary, the Secretary will seek a technical assessment and a recommendation from the Assessment Panel before making a decision on the variation. If the Secretary approves the variation, a variation of the funding agreement will be made. If the Secretary does not approve the variation, the issue of credits for the project will cease.

42.       Where an MVP is found to have received duty credits for R&D activities or expenditure that did not take place, or to have claimed duty credits for R&D activities or expenditure that was ineligible for assistance, the MVP will incur an unearned credit liability in accordance with Part 9 of the Act.

Managing carryover of project overspends or underspends

43.       There is limited provision under the Scheme to carry forward project underspends and overspends in actual activity relative to forecasts. An overspend in a year that is not used to offset an underspend in the previous year or the next year of an overspend must be returned to the Scheme. MVPs cannot be paid more than the maximum stated in their funding agreements.

44.       If an MVP undertakes less than 75% of an R&D project the MVP has agreed it would do, credits for that project will cease. If the base level of R&D expenditure for an MVP is more than 25% lower than the original estimate, credits allocated (but not issued to the MVP) for all projects to be undertaken by the MVP in future must be returned to the Scheme.

Scheme’s performance

45.       The Minister may publish information in relation to the participation of MVPs in the Scheme. The information may include that the MVP was a participant in the Scheme and the period of the MVP’s participation in the Scheme, the amount of duty credit received by the MVP and descriptive titles of each of the MVP’s approved R&D projects.



 

ACIS Stage 2 Motor Vehicle Producer Research and Development Scheme 2004

Part 1                 Preliminary

  

1              Name of Scheme

                This Scheme is the ACIS Stage 2 Motor Vehicle Producer Research and Development Scheme 2004.

2              Commencement

                This Scheme commences on the date of its notification in the Gazette.

3              Object

                The object of this Scheme is to increase the amount of research and development undertaken by MVPs in Australia.

4              Definitions

                In this Scheme:

Act means the ACIS Administration Act 1999.

application round means the period of time within which applications for credits under this Scheme are called for, received and finalised.

Assessment Panel means an Automotive Committee of the Board, or the Board itself, whichever body is making recommendations to the Secretary on the merit of proposed R&D projects.

Australian-based research and development has the meaning given by regulation 3 of the ACIS Administration Regulations 2000.

Board means the Industry Research and Development Board established by the Industry Research and Development Act 1986.  

Department means the Department administered by the Minister.

eligible R&D activity has the meaning given by subsection 5 (1).

eligible R&D expenditure has the meaning given by section 6.

eligible R&D project has the meaning given by subsections 5 (2), (4) and (5).

funded project means an eligible R&D project to which credits are issued for eligible R&D activities under section 16 and in relation to which there is a funding agreement.

funding agreement means an agreement under section 19 in relation to an eligible R&D project.

funding year means a calendar year in which an eligible R&D project may receive type J duty credits.

merit criteria means the criteria mentioned in sections 21 to 24.

Minister means the Minister administering the Act.

offshore research and development has the meaning given by regulation 3 of the ACIS Administration Regulations 2000.

quarterly return means a return under section 35 of the Act.

R&D means research and development.

R&D expenditure base, for a year, means the average of an MVP’s eligible R&D expenditure for R&D activities undertaken in Australia or overseas (other than funded projects) for the 3 previous years.

Scheme total means the amount of credits available under this Scheme under section 8.

year means calendar year.

Note   ACIS, ACIS year, modulated credit, motor vehicle producer, MVP, participant, quarter, sales value, Secretary, type C investment, type J investment, unmodulated type J investment credit and unmodulated uncapped production credit are defined in section 6 of the Act.

5              Eligible R&D activity and eligible R&D project

         (1)   An eligible R&D activity is an activity:

                (a)    that is systematic, investigative or experimental; and

               (b)    that involves innovation or technical risk; and

                (c)    that may involve technology transfer; and

               (d)    that:

                          (i)    involves R&D activities undertaken in Australia; and

                         (ii)    may involve R&D activities undertaken overseas; and

                (e)    the object of which is the acquisition of new knowledge, creating new or improved materials, products, devices or new production processes; and

                (f)    that is directly related to the design, development, engineering or            production of motor vehicles, engines, engine components,      automotive components, automotive machine tools or automotive tooling.

         (2)   A project is an eligible R&D project only if the project includes 1 or more eligible R&D activities.

         (3)   The following are not eligible for credits as part of an eligible R&D project:

                (a)    the design of a building (whether or not the building is to be used to house a R&D activity);

               (b)    the design and installation of financial management systems;

                (c)    market research, market testing, market development or sales promotion (including customer surveys);

               (d)    routine quality control;

                (e)    management studies or efficiency surveys;

                (f)    routine collection of information (other than for the purpose of R&D);

                (g)    the acquisition from another participant of technology or the rights to use technology;

                (h)    the protection of industrial property rights by legal action;

                 (i)    test and evaluation once a prototype becomes a production model;

                (j)    staff selection systems;

               (k)    the sale by an MVP of existing know-how, including off-the-shelf computer software that can be applied without modification to the needs of persons other than the MVP;

                 (l)    the sale by an MVP of training services;

               (m)    an activity for which type C investment is claimed under the Act.

         (4)   An eligible R&D project may include R&D performed under a contract for the MVP by a person other than an MVP.

         (5)   An eligible R&D project may include offshore research and development of not more than 20% of the eligible R&D expenditure for the project.

         (6)   If an MVP undertakes an eligible R&D project as a joint-venture between the MVP and another party, the MVP must not claim R&D costs for the project that are incurred by the MVP’s joint-venture partner.

Note   Under section 31, a participant that is not an MVP must not claim ACIS credits for activities claimed by MVPs under this Scheme.

6              Eligible R&D expenditure

         (1)   In this Scheme, eligible R&D expenditure, for an activity, means:

                (a)    the maximum claimable value for R&D for the activity; and

               (b)    expenditure incurred on or after 1 October 2005 and on or before 30 September 2010.

         (2)   In this Scheme, the method of calculating the maximum claimable value for R&D is the same as the method of calculating the maximum claimable value for allowable research and development set out in regulation 13H of the ACIS Administration Regulations 2000.

         (3)   In this Scheme, labour costs and the costs of recruitment, training and development must be determined in the way set out in regulation 13I of the ACIS Administration Regulations 2000.

7              Allowed kinds of research and development

                For paragraph 60A (2) (a) of the Act, the kind of research and development undertaken by MVPs that is allowed for the purposes of this Scheme is eligible R&D activities.

8              Amount of credits available under this Scheme

                For paragraph 60A (2) (b) of the Act, the amount of credits available to be issued under this Scheme is $150 million.

9              Intellectual property

                An MVP may apply for credits under this Scheme whether or not the intellectual property in the project is owned by a company incorporated outside Australia.

10            Administration of Scheme

                The Department:

                (a)    must undertake the day to day administration of this Scheme, including the administration of the application and assessment processes and monitoring the performance of MVPs against funding agreements; and

               (b)    may make recommendations to the Secretary.


 

Part 2                 Issue of credits

Division 1              Application rounds

11            Application rounds

         (1)   The Secretary must ensure that there are at least 2 application rounds.

         (2)   The Secretary may issue a total of not more than $75 million in credits to an MVP over all application rounds.

         (3)   The Secretary may issue a total of not more than $90 million in credits in the first application round.

         (4)   After the completion of an application round, the Secretary may issue the balance of the Scheme total in credits in subsequent application rounds.

Division 2              Application for credits

12            Call for applications

                The Secretary must call for applications for credits at the beginning of each application round.

13            Application for credits

         (1)   An MVP registered under ACIS may make an application for credits for a proposed R&D project.

         (2)   An MVP may make only 1 application in each application round.

         (3)   An application:

                (a)    may include 1 or more proposed R&D projects; and

               (b)    must be made in the form approved by the Secretary; and

                (c)    must include the following information for each proposed R&D project:

                          (i)    the estimated R&D expenditure base for the first funding year of the project;

                         (ii)    the project’s claims against the merit criteria.

Division 3              Assessment of applications

14            Decision — eligible R&D project

         (1)   If the Secretary receives an application under section 13, the Secretary must consider the application and decide, on reasonable grounds, whether each proposed R&D project included in the application is an eligible R&D project.

         (2)   In making a decision under subsection (1), the Secretary may seek further information from the applicant, in writing or through interviews with the applicant.

         (3)   The applicant must meet all costs associated with providing information to the Secretary.

         (4)   If the Secretary decides that a proposed R&D project is not an eligible R&D project, the Secretary must:

                (a)    refuse the application in respect of the project; and

               (b)    give the applicant written notice of the refusal, including:

                          (i)    a statement of reasons for the decision; and

                         (ii)    a statement to the effect that the applicant may apply for administrative review of the decision under section 34.

         (5)   If the Secretary decides that a proposed R&D project is an eligible R&D project, the Secretary must refer the application in respect of the project to the Assessment Panel.

15            Recommendation and ranking by Assessment Panel

         (1)   The Assessment Panel must, for each eligible R&D project referred to it by the Secretary in an application round:

                (a)    assess the project against the merit criteria in accordance with Division 4; and

               (b)    rank the project in accordance with section 25.

         (2)   In assessing the merit of a project or determining its rank, the Assessment Panel may seek further information from the applicant, in writing or through interviews with the applicant.

         (3)   The applicant must meet all costs associated with providing information to the Assessment Panel.

16            Decision on application

         (1)   In deciding whether to issue credits for an eligible R&D project, the Secretary must consider:

                (a)    the assessment and ranking for the project provided by the Assessment Panel; and

               (b)    the amount of credits that is available in the application round and the Scheme; and

                (c)    the amount of credits issued to the applicant for other eligible R&D projects (if any); and

               (d)    whether the total amount of modulated credit, unmodulated uncapped production credit and unmodulated type J investment credit issued to the MVP in the year has exceeded 5% of the sales value of the MVP’s ACIS goods and services in respect of the previous year; and

                (e)    the object of this Scheme.

         (2)   The Secretary may decide to issue credits for specified eligible R&D activities within an eligible R&D project.

         (3)   The Secretary must not decide to issue credits for an activity mentioned in subsection 5 (3) within the project.

17            Amount of credits

                If the Secretary decides to issue credits for an eligible R&D project, the Secretary must decide the value of the credits to be issued for the project.

Note   Paragraph 60A (2) (c) of the Act provides that this Scheme may include guidelines for working out the amount of unmodulated type J investment credit available to be issued to an MVP in respect of a quarter. It is intended that such guidelines will be included in this Scheme in the future.

It is intended that the guidelines will provide that the Secretary must decide to issue credits to a value equal to 45% of the eligible R&D expenditure for a project for the quarter until 1 of the following occurs:

(a)   the value of credits issued in the first application round reaches $90 million;

(b)   the value of credits issued under this Scheme to the MVP reaches $75 million;

(c)   the issue of the credits to the MVP in an ACIS year would result in the total amount of modulated credit, unmodulated uncapped production credit and unmodulated type J investment credit issued to the MVP exceeding 5% of the sales value of the MVP’s ACIS goods and services in respect of the previous year;

(d)   the value of credits issued reaches the Scheme limit.

It is also intended that the guidelines will provide that if a proposed project receives funding under a Commonwealth grant scheme, other than:

(a)   credits under this Scheme; or

(b)   an amount of Commonwealth assistance that is not financial assistance for section 11 of the Act as explained in the ACIS Administration (Commonwealth Financial Assistance) Determination 2000;

the Secretary must deduct the value of the funding provided under the other scheme from the amount of credits that the Secretary issues to the project.

18            Notice of decision and offer of credits

         (1)   The Secretary must give the applicant for each project referred to the Assessment Panel written notice of his or her decisions under sections 16 and 17 for the project.

         (2)   A notice under subsection (1) in relation to a decision not to offer credits for an eligible R&D project must include:

                (a)    a statement of reasons for the decision; and

               (b)    a statement to the effect that the applicant may apply for administrative review of the decision under section 111 of the Act.

         (3)   If the Secretary has decided to offer credits for an eligible R&D project, the Secretary must include with the notice:

                (a)    a written offer of credits, including the level of funding; and

               (b)    a statement to the effect that the applicant may apply for administrative review of the decision in relation to the amount of credit offered under section 111 of the Act.

         (4)   The applicant must give the Secretary written notice of the applicant’s acceptance or rejection of the offer of credits within 30 days after receiving the offer.

         (5)   The applicant may reject the offer of credits.

19            Agreement with the Commonwealth

         (1)   If an applicant accepts an offer of credits under section 18, the Secretary and the applicant must, within 90 days after the Secretary receives the notice of acceptance, try to make an agreement.

         (2)   An agreement must set out the terms of the agreement and the roles and responsibilities of each party in relation to the project.

         (3)   If the parties cannot agree on the terms of the agreement within 90 days after the Secretary receives the notice of acceptance, the Secretary may withdraw the offer of credits for the project.

20            Issuing credits

         (1)   The Secretary may issue credits on or after 1 January 2006 and on or before 31 December 2010.

         (2)   The Secretary must, as soon as practicable after receiving a quarterly return from an MVP for a quarter, work out the amount of unmodulated type J investment credit to be issued to the MVP for the quarter in accordance with the formula:

where E means the eligible R&D expenditure for all funded projects being undertaken by the MVP in the quarter.

         (3)   The Secretary must issue credits for a funded project to the MVP undertaking the project quarterly in arrears as soon as practicable after the receipt of a quarterly return.

Note   Under section 36 of the Act, an MVP’s quarterly return must include details of type J investment undertaken by the MVP and details of Commonwealth assistance received by the MVP in the quarter. These details will enable the Department to determine the amount of ACIS type J duty credits payable to the MVP for the quarter.

         (4)   The Secretary must not issue to an MVP more credits in relation to a funded project than the maximum stated in the funding agreement for the project.

         (5)   If, under section 29, the Secretary approves a variation to a funded project, and the funding agreement for the project is varied, the Secretary must not issue to the MVP more credits in relation to the project than the maximum stated in the original funding agreement.

Division 4              Merit criteria

21            Merit criterion 1: the calibre of new R&D activity that will be generated in Australia by the eligible R&D project

         (1)   The Assessment Panel must assess the calibre of new R&D activity that will be generated in Australia by the eligible R&D project.

         (2)   In assessing the calibre of new R&D activity to be generated by the project, the Assessment Panel must determine whether the project:

                (a)    involves an entirely new line of R&D, and is additional to the applicant’s existing R&D expenditure base; or

               (b)    enables the further development of a current line of R&D, and is additional to an applicant’s existing R&D expenditure base; or

                (c)    involves an entirely new line of R&D, but is not additional to an applicant’s existing R&D expenditure base; or

               (d)    does not meet paragraph (a), (b) or (c).

         (3)   The Assessment Panel must:

                (a)    regard a project that meets paragraph (2) (a) more highly than a project that meets paragraph (2) (b); and

               (b)    regard a project that meets paragraph (2) (b) more highly than a project that meets paragraph (2) (c); and

                (c)    regard a project that meets paragraph (2) (c) more highly than a project that meets paragraph (2) (d).

Note   In an application for credits under this Scheme, each applicant will be required to state whether the proposed project meets paragraph (2) (a), (b) or (c). The Assessment Panel must determine whether the project meets paragraph (2) (a), (b), (c) or (d). It is possible that the Assessment Panel’s determination may differ from the applicant’s assessment of the project.

22            Merit criterion 2: the technical merit of the eligible R&D project

         (1)   The Assessment Panel must assess the technical merit of the eligible R&D project.

         (2)   In assessing the technical merit of the project, the Assessment Panel must consider the following:

                (a)    the extent to which the project suggests scope for future growth beyond the time-frame of the project;

               (b)    the extent to which the project involves leading edge technologies, techniques or skills for Australia;       

                (c)    the extent to which the project includes activities that are new for the applicant in Australia;

               (d)    the extent to which the project is world class in nature;

                (e)    the degree of innovation evident in the project;

                (f)    the extent to which the project will create new or improved linkages along the value chain with Australian suppliers;

                (g)    the extent to which the applicant will extend existing, or forge new links with research institutions;

                (h)    the facilities and research infrastructure available to the applicant, and the capabilities of the personnel to be involved (including the facilities and personnel of contract partners);

                 (i)    whether the applicant has provided a clear and detailed R&D plan including commercialisation strategies.

23            Merit criterion 3: the level of benefit, including environmental benefit to the wider Australian community of the eligible R&D project

         (1)   The Assessment Panel must assess the economic and environmental benefits likely to result from the eligible R&D project.

         (2)   In assessing the economic and environmental benefits likely to result from the project, the Assessment Panel must consider the following:

                (a)    the extent to which the project enhances or strengthens the Australian automotive industry’s capabilities (for example, by filling a gap in the value chain, developing expertise, or introducing new skills);

               (b)    the extent to which there is potential for benefit to other Australian industries as a result of the applicant’s introduction of new transferable skills, knowledge, technologies or techniques;

                (c)    the extent to which the project utilises Australian capabilities, resources and inputs including Australian-developed intellectual property;

               (d)    the extent to which the project contributes to Australia’s environmental savings.

24            Merit criterion 4: the contribution of the eligible R&D project to the sustainability of an internationally competitive automotive industry in Australia

         (1)   The Assessment Panel must assess the contribution to the sustainability of an internationally competitive automotive industry of the eligible R&D project.

         (2)   In assessing the contribution to the sustainability of an internationally competitive automotive industry of the project, the Assessment Panel must consider the following:

                (a)    the extent to which the project represents a commitment to doing business in Australia in the longer term, having regard to the applicant’s long-term R&D and business strategy in Australia;

               (b)    the extent to which the project utilises and builds upon Australian industry’s strengths;

                (c)    the extent to which the project is an integral part of the applicant’s future global R&D strategy;

               (d)    the extent to which R&D facilities in Australia will be responsible for a higher proportion of the applicant’s global R&D as a result of the project.

25            Ranking

         (1)   After assessing each eligible R&D project in an application round against the merit criteria, the Assessment Panel must, subject to subsection (2):

                (a)    decide on a score for the project against each merit criterion; and

               (b)    establish a relative merit ranking for all projects based on the total score of the projects against the merit criteria.

         (2)   The Assessment Panel may decide to refuse to provide a ranking for a project if the Assessment Panel is not satisfied with the level of merit of the project in relation to 1 or more of the merit criteria.

         (3)   The Assessment Panel must:

                (a)    give the Secretary the assessment and relative merit ranking for each project that has a rank; and

               (b)    give the Secretary the assessment for projects without a rank.


 

Part 3                 Monitoring of projects

  

26            Annual assessment

         (1)   The Department may, within 6 months after the end of a year in which an MVP received credits for a funded project, assess the MVP’s performance against the funding agreement for the project.

         (2)   If, in a year, an MVP undertook less than 75% of a funded project it had agreed to do in the year, credits allocated (but not issued to the MVP) for that project for future years must be returned to the Scheme.

         (3)   If an MVP’s R&D expenditure base for the first funding year of a project is more than 25% less than the estimated R&D expenditure base for the project given in the MVP’s application under section 11, credits allocated (but not issued to the MVP) for funded projects that were to be undertaken by the MVP in future must be returned to the Scheme.

27            Provision of information

                Within 45 days after the end of the first funding year in which an MVP has received credits under this Scheme for a funded project, the MVP must give to the Department, details of the MVP’s R&D expenditure base for the year.

28            Managing carryover of project overspends or underspends

         (1)   An overspend in a year for a funded project may be carried forward in full for 1 year only.

         (2)   An overspend in a year for a funded project that is not used to offset an underspend in the previous year or the next year must be returned to the Scheme.

         (3)   An underspend in a year for a funded project may be carried forward in full for 1 year only, if, in the year in which the underspend arose, the MVP spent at least 75% of the amount of R&D expenditure the MVP had agreed it would spend on the project in the year (taking into account any earlier overspend carried forward).

         (4)   If in a year an MVP spends less than 75% of the amount of R&D expenditure the MVP had agreed it would spend on a funded project in the year (taking into account any earlier overspend carried forward), credits allocated (but not issued to the MVP) for expenditure in future for the project must be returned to the Scheme.

Note   Under section 26, if, in a year, an MVP undertook less than 75% of a funded project it had agreed to do in the year, credits issued for that project for future years must be returned to the Scheme.


 

Part 4                 Variation of agreement

  

29            Variation of agreement

         (1)   This section applies if:

                (a)    an MVP asks the Secretary to consider a variation of a funded project because the MVP is not able to undertake all of the activities for the project; or

               (b)    in the Secretary’s opinion, a funded project has been varied, and the Secretary has not approved the variation.

         (2)   If, in the Secretary’s opinion, the variation would not affect the assessment of the project by the Assessment Panel, the Secretary may approve the variation, or refuse to approve the variation, without consulting the Assessment Panel.

         (3)   If, in the Secretary’s opinion, a variation mentioned in paragraph (1) (a) would affect the assessment of the project by the Assessment Panel, the Secretary must ask the Assessment Panel to assess the effect of the variation on the relative merit of the project under the merit criteria.

         (4)   If, in the Secretary’s opinion, a variation mentioned in paragraph (1) (b) would affect the assessment of the project by the Assessment Panel, the Secretary must ask the Assessment Panel to provide a technical assessment of the progress reported by the MVP compared to the technical milestones specified in the funding agreement for the project.

         (5)   The Assessment Panel must conduct the assessment or technical assessment and recommend that the Secretary approve or refuse to approve the variation.

         (6)   After receiving the recommendation of the Assessment Panel, the Secretary must decide to approve or to refuse to approve the variation.

         (7)   The Secretary must give the MVP written notice of a decision under subsection (2) or (6), including, for a decision to refuse to approve a variation:

                (a)    a statement of reasons for the decision; and

               (b)    a statement to the effect that the applicant may apply for administrative review of the decision under section 34.

         (8)   If the Secretary refuses to approve the variation, and the project cannot continue to be funded under this Scheme without the variation being made, the issue of credits for the project must cease on a date determined by the Secretary.

         (9)   If the Secretary approves the variation, the Secretary and the MVP must vary the funding agreement for the project accordingly.

       (10)   A variation under subsection (9) takes effect from a date decided by the Secretary.

30            Return of credits

                If an MVP has been issued credits for an R&D activity or expenditure that did not take place, or has claimed credits for an R&D activity or expenditure that was not part of a funded project:

                (a)    the credits must be returned to the Scheme to be made available for future rounds; and

               (b)    the MVP will incur an unearned credit liability in accordance with Part 9 of the Act.


 

Part 5                 Claims by participants other than MVPs

  

31            Claims by participants other than MVPs

                A participant that is not an MVP must not claim ACIS credits for activities claimed by MVPs under this Scheme.


 

Part 6                 Miscellaneous

  

32            Publishing information

                The Minister may publish the following information about a MVP that is, or was, a participant in this Scheme:

                (a)    that the MVP is, or was, a participant, and the period of the MVP’s participation in this Scheme;

               (b)    the amount of duty credit entered in the ACIS ledger in respect of the MVP’s participation in the Scheme in any 1 ACIS year;

                (c)    a descriptive title of the MVP’s funded project or projects.

33            Assessment of performance of Scheme

                In assessing the performance of this Scheme in meeting its objective, the Department must consider:

                (a)    the quality of the R&D undertaken; and

               (b)    the amount and type of new R&D projects taking place in Australia; and

                (c)    the net increase in the level of automotive R&D expenditure undertaken; and

               (d)    the level of benefit to the Australian economy; and

                (e)    any other relevant matter.

34            Administrative review

                An MVP may apply to the Administrative Appeals Tribunal for the review of a decision by the Secretary:

                (a)    that a proposed R&D project is not an eligible R&D project under subsection 14 (1); or

               (b)    to refuse to approve a variation to a funded project under subsection 29 (2) or (6).

Note   Under paragraph 111 (j) of the Act, applications may be made to the Administrative Appeals Tribunal for review of a decision under this Scheme not to issue an MVP with unmodulated type J investment credit or as to the amount of any credit to be so issued.