The Senate Economics Legislation Committee’s inquiry into the Federal government’s widely criticised plan to cut $1.8 billion from the research and development tax incentive (RDTI) has again been pushed back.
It is understood that the Committee will have until December 2020 to report back on its review of the proposed legislation, having been delayed due to the COVID-19 pandemic.
“The government is committed to backing R&D investment and the economic opportunities and jobs it generates. The government will continue to support R&D activity as a means of improving the future competitiveness and productivity of the economy,” Mr Frydenberg told InnovationAus.
However, Australian tech start-ups as well as many other companies fear that the planned changes would lead many to relocate their R&D activities overseas due to the dwindling funding for the RDTI.
While minor modifications were made to the scheme early in 2020, the proposed legislation for review in December includes:
- An increase of the expenditure threshold to $150 million;
- A $4 million cap for smaller companies; and
- A new “intensity measure” to calculate the size of the offset for larger firms.
As Government Incentives specialists, CharterNet strongly supports the need for a thorough review into the proposed legislation and the impact the changes would have on R&D activities within Australia, particularly the unfair impact on start-ups.
We look forward to clarity and for decisions to be made in the interests of keeping innovation prospering within Australia.
As advisors to some of our country’s fastest growing companies, we understand how valuable government grants including the R&D Tax Incentive, the Export Market Development Grant (EMDG) and the Early Stage Innovation Company (ESIC) are from a cashflow perspective. We have been impressed by the standard of innovation evident across the country and believe with the right support Australia’s technology start-ups will be at the forefront of the post-COVID recovery.