EXPLANATORY STATEMENT
1987 No. 218
BOUNTY (COMPUTERS) ACT 1984
BOUNTY COMPUTERS REGULATIONS (AMENDMENT)
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR SCIENCE AND SMALL BUSINESS
The attached Regulation has two purposes:
(i) to clarify the meaning of the term “royalties” within Regulation 3 of the principal regulations by inserting particular costs which shall be understood as being within that term, and
(ii) to ensure that amounts paid or credited as “royalties” costs are not considered part of the factory cost incurred in connection with processes in the manufacture of bountiable computer ‘equipment; the result being that such costs shall not be included in the calculations of costs on which bounty is payable.
Background
A bounty is payable under the Bounty (Computers) Act 1984 (‘the Act’) on the manufacture of particular computer equipment. Under paragraph 6(5)(z) of the Act certain factory costs are not to form part of the permissible costs for the purposes of calculating the amount of bounty payable and under Regulation 3 of the principal regulations, “royalties” are prescribed to be excluded for that purpose.
Some companies have recently sought to include commercial “license payments” with respect to the exchange of information or the use of industrial technology as part of the permissible costs on which bounty is payable, and have therefore argued these costs are outside the “royalties” exclusion. It has been the consistent policy objective of the regulations however, to include such payments within the term “royalties” and thus exclude them from consideration for bounty calculation purposes.
The Regulations seek to clarify what costs are intended to come within the “royalties” exclusion, by specifying particular circumstances and costs which shall be considered “royalties”.
The Regulations provide as follows:
Regulation 1 provides for the Regulations to come into operation on the first of a month (ie. 1 October 1987) a date suggested for the commencement to assist with bounty calculations from an accounting point of view.
Regulation 2 provides as follows;
• | Subregulation (2) | provides that the term “royalties” includes any payment, however described and irrespective of the frequency of such, which is made as consideration for; |
| | - the use or right to use particular copyrights, patents etc. (ie. intellectual property) subregulation (2)(a); |
| | - the use or right to use industrial, commercial or scientific equipment subregulation (2)(b); |
| | - the supply of scientific, technical, industrial or commercial information. This covers manufacturing data which may be used in the country, but may be supplied from overseas at a given charge subregulation (2)(c); |
| | - the supply of any assistance associated with matters covered in sub-regulation (2)(a), (b) and (c) subregulation (2)(d); or |
| | - the total or partial suspension of a liability in relation to rights or property or the supply of information within the terms of the other sub-regulations subregulation (2)(e) |
Overview
The Bounty (Computers) Regulations (Amendment) 1987 was enacted to amend the Bounty (Computers) Regulations 1984, clarifying the definition of "royalties" and ensuring that certain payments are excluded from the calculation of costs on which bounty is payable under the Bounty (Computers) Act 1984. These regulations were issued by the authority of the Minister of State for Science and Small Business. The primary policy objective is to include specific commercial license payments within the term "royalties" to exclude them from the permissible costs for bounty calculation purposes. This amendment was introduced in response to companies attempting to include such payments as part of the permissible costs, thereby broadening the scope of costs eligible for bounty. The regulations clarify that "royalties" include any payments made as consideration for the use or right to use intellectual property, industrial equipment, or the supply of information, ensuring these costs are not included in the calculation of bounty payable for the manufacture of eligible computer equipment.
Scope and Application
The Bounty (Computers) Act 1984 applies to entities engaged in the manufacture of specific computer equipment that qualifies for a bounty under the Act. The Act aims to ensure that certain costs, particularly those related to royalties, are excluded from the calculation of the bounty payable. The Bounty Computers Regulations (Amendment) issued under the authority of the Minister of State for Science and Small Business seek to clarify and expand the definition of "royalties" to ensure that payments related to the use of intellectual property, industrial equipment, or the supply of information are not considered as part of the factory costs for bounty purposes. The regulations apply nationally and are intended to come into effect on 1 October 1987, providing a clear timeframe for the implementation of the changes to bounty calculations. The exclusions outlined in the regulations are designed to prevent companies from including certain payments within the permissible costs for bounty calculation, thereby maintaining the integrity of the bounty scheme by limiting the types of costs that can be offset against the bounty payable.
Key Provisions
The Bounty (Computers) Regulations (Amendment) provide critical clarifications on the meaning and scope of the term "royalties" within the context of the Bounty (Computers) Act 1984. Regulation 2(2) defines "royalties" as any payment made for the use or right to use intellectual property, industrial, commercial, or scientific equipment, or the supply of scientific, technical, industrial, or commercial information. These payments include considerations for the supply of assistance associated with the aforementioned elements, as well as any payment for the total or partial suspension of a liability related to rights or property or the supply of information. This regulation ensures that certain costs, specifically those pertaining to intellectual property and information, are considered as "royalties" and thus excluded from the costs eligible for bounty under the Act.
These regulations impose specific obligations on the entities involved in the manufacture of computer equipment eligible for bounty. Firstly, they must ensure that any payments classified as "royalties" under the newly defined terms are excluded from the calculations of eligible factory costs for bounty purposes. This means that any costs related to the use of intellectual property, industrial, commercial, or scientific equipment, or the supply of scientific, technical, industrial, or commercial information must be excluded from the costs that can be considered for bounty payments. This requirement is critical for compliance with the Bounty (Computers) Act and the associated regulations, ensuring that only appropriate costs are included in the bounty calculation.
Failure to comply with these regulations can result in serious consequences. If an entity fails to correctly classify and exclude "royalties" from the eligible costs for bounty, they may face penalties. The Bounty (Computers) Act does not specify maximum penalties in this context, but non-compliance can lead to financial penalties and legal action. It is imperative for entities to adhere to these regulations to avoid any adverse outcomes, including potential audits and enforcement actions by the relevant authorities. Accurate reporting and exclusion of "royalties" from the bounty calculation process are essential to avoid these repercussions.