The Federal Government has released the report of its review into the R&D Tax Incentive, which recommends cuts in some parts and boosts in others, and is seeking industry feedback before making final decisions. The recommendations include:
- adding a new premium level of incentive for R&D where businesses collaborate with publicly-funded research organisations like CSIRO and the universities, raising the non-refundable tax offset from 40 cents on the dollar of R&D expenditure to up to 60 cents;
- capping at $2 million the level of refunds that SMEs can claim under the R&D Tax Incentive;
- using an ‘R&D intensity threshold” to limit the existing non-refundable incentive, which would apply only to R&D spending above a minimum threshold of total business costs. The threshold might be set between 1% to 2%; and
- clarifying the meaning of the existing rules around eligible expenditure and other matters, so as to reduce uncertainty and costs for auditing and administration.
If implemented these changes would have both costs and benefits for innovation active businesses. Our initial reaction to the report is that while the changes deserve consideration on their merits, the Incentive has already been subject to too much change and returning to stability is important – see our full response here.
Ai Group is preparing a submission to the Government on the proposals and is keen to hear from members about your views. Please contact Ai Group adviser Tennant Reed, Tel: 03 9867 0145, to provide your input.
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