By Alan Baghdasarayan | Senior Manager, R&D Services
In anticipation of the May federal budget, Treasurer Scott Morrison has announced that there may be modifications made to the Research & Development (R&D) Tax Incentive.
According to Mr. Morrison, the program has been “taken for a ride” by some businesses and must be overhauled and relaunched. As reported by the Financial Review, “this would prevent companies claiming tax breaks for business-as-usual activities while rewarding businesses achieving high levels of R&D intensity.”
Currently, the R&D Tax Incentive equates to a third of spending when it comes to science and innovation in Australia, and Mr. Morrison said he would not be writing any more “blank cheques.”
As discussed in our previous blog, in January the Innovation and Science Australia (ISA) panel put forward 30 recommendations to the Federal Government to improve and strengthen Australia’s innovation performance. Among these, there are five key policy recommendations for the R&D Tax Incentive designed to improve the integrity of the program and increase Australia’s global innovation ranking.
“It is not a tax concession designed for businesses to exploit as a proxy for achieving a lower tax rate,” he told The Australian Financial Review Banking & Wealth Summit. According to the Financial Review, “Mr. Morrison said the government was closely examining those recommendations.”
The main recommendations that are most likely to be discussed during the May Federal Budget include:
- A $4 million annual limit on the refundable R&D tax offset
- A $40 million refundable R&D tax offset lifetime cap for companies
- A premium incentive for collaboration with universities.
At CharterNet, we’ll be following this story closely and are eager to hear the Treasurer’s ruling of the May Federal Budget. This story is a timely reminder to speak with one of CharterNet’s R&D experts to get your R&D Tax Incentive submission started before the April 30 deadline. Contact us today.