One last chance to dispute the R&D tax concession cuts

The feds have announced a month-long consultation on the Research and Development Tax Incentive Amendments legislation.

Where this came from: No one will be able to complain they were not asked about the changes. Complain they do not like it for sure, but word of it has long reached tax accountants in Andromeda. Back in 2016 the Three Fs (Innovation Australia chair Bill Ferris, Chief Scientist Alan Finkel and Treasury Secretary

John Fraser) reviewed the existing system and recommended reducing and more tightly targeting the concession (CMM September 29 2016). This did not please start-ups and big research spenders alike who warned of dire R&D outcomes and ministers came and went without anything much happening until the budget, which announced $2bn in savings across the forward estimates.

What it’s about: Opponents of the plan have a chance to save something, probably not much from the draft bill.  The government plans to contain the $3bn pa cost of the existing incentive by increasing the threshold by a third, to $150m and cap the tax refund on R&D at $4m (at present companies with less than $20m turnover can get the difference between their tax liability and R&D tax offset as a refund). There are also changes to the offset rates for tax.

What happens next: Any chance of clawing concessions back seems minimal. Businesses that benefit under the existing arrangement have not made much of a lobbying impact since the Three Fs review and the feds have wisely chosen not to upset the highly organised and always outspoken medical research lobby. The new legislation exempts clinical trials from the $4m cap.


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