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R&D Changes on hold

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On February 11, the Senate’s Economic Legislation Committee handed down a report in to the proposed changes to the R&D Tax Incentive. After receiving submissions from industry stakeholders and businesses involved in R&D, the changes have been put on hold.

As there are not enough sitting days available before the coming Federal Election to be held in May 2019, the proposed changes are on hold until after the election.

The changes proposed included the following:

  • Raising the eligible expenditure threshold for R&DTI claims from $100 million to $150 million.
  • A $4 million cap on annual cash refunds for companies with an annual turnover of less than $20 million.
  • Refundable tax offsets to be calculated as 13.5 percentage points above the claimant’s company tax rate.
  • Intensity based thresholds on the tax benefit derived from undertaking R&D for companies with a turnover of more than $20 million.

The proposed changes aimed to cut $2.4 billion from the R&D Tax Incentive component of the federal budget over a 4-year period.

The Economic Legislation Committee received 75 submissions from companies, universities and R&D Specialists. The majority of submissions were critical of the changes and expressed concern that cutting the amount of government investment in R&D in Australia would drive companies off shore.

There is concern also for the SME’s that carry out R&D who rely on the incentive to continue product innovation and business development from inception to market with some respondents submitting that the changes would mean the end of R&D in the small business segment.

The good news is that the Senate Committee has sent the changes back to the government with a request for further analysis of the impact of any changes as no actual modelling has been undertaken by the treasury. The proposal seems focused solely on making financial cuts to the scheme without actually assessing the impact it may have on Australian innovation and industry.

RADBE Consulting will be keeping a close eye on any developments or announcements regarding the R&D Tax Incentive in the federal budget due in April and in the lead up to the federal election.

If you would like to know how these proposed changes may affect your business, please get in contact with one of our consultants.

On February 11, the Senate’s Economic Legislation Committee handed down a report in to the proposed changes to the R&D Tax Incentive. After receiving submissions from industry stakeholders and businesses involved in R&D, the changes have been put on hold.

As there are not enough sitting days available before the coming Federal Election to be held in May 2019, the proposed changes are on hold until after the election.

The changes proposed included the following:

  • Raising the eligible expenditure threshold for R&DTI claims from $100 million to $150 million.
  • A $4 million cap on annual cash refunds for companies with an annual turnover of less than $20 million.
  • Refundable tax offsets to be calculated as 13.5 percentage points above the claimant’s company tax rate.
  • Intensity based thresholds on the tax benefit derived from undertaking R&D for companies with a turnover of more than $20 million.

The proposed changes aimed to cut $2.4 billion from the R&D Tax Incentive component of the federal budget over a 4-year period.

The Economic Legislation Committee received 75 submissions from companies, universities and R&D Specialists. The majority of submissions were critical of the changes and expressed concern that cutting the amount of government investment in R&D in Australia would drive companies off shore.

There is concern also for the SME’s that carry out R&D who rely on the incentive to continue product innovation and business development from inception to market with some respondents submitting that the changes would mean the end of R&D in the small business segment.

The good news is that the Senate Committee has sent the changes back to the government with a request for further analysis of the impact of any changes as no actual modelling has been undertaken by the treasury. The proposal seems focused solely on making financial cuts to the scheme without actually assessing the impact it may have on Australian innovation and industry.

RADBE Consulting will be keeping a close eye on any developments or announcements regarding the R&D Tax Incentive in the federal budget due in April and in the lead up to the federal election.

If you would like to know how these proposed changes may affect your business, please get in contact with one of our consultants.

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