The R&D Tax Incentive review for 2016 has been released with a 46 page report and 6 main recommendation for discussion.
What is the R&D Tax Incentive Review?
The R&D Tax Incentive review is aimed to identify opportunities to improve the effectiveness and integrity of the R&D programme, including how its focus could be sharpened to encourage additional R&D.
The six R&D Tax Incentive recommendations include:
- Retain the current definition of eligible activities and expenses under the law, but develop new guidance, including plain English summaries, case studies and public rulings, to give greater clarity to the scope of eligible activities and expenses.
- Introduce a collaboration premium of up to 20 percent for the non-refundable tax offset to provide additional support for the collaborative element of R&D expenditures undertaken with publicly-funded research organisations. The premium would also apply to the cost of employing new STEM PhD or equivalent graduates in their first three years of employment. If an R&D intensity threshold is introduced (see Recommendation 4), companies falling below the threshold should still be able to access both elements of the collaboration premium.
- Introduce a cap in the order of $2 million on the annual cash refund payable under the R&D Tax Incentive, with remaining offsets to be treated as a non-refundable tax offset carried forward for use against future taxable income.
- Introduce an intensity threshold in the order of 1 to 2 percent for recipients of the non-refundable component of the R&D Tax Incentive, such that only R&D expenditure in excess of the threshold attracts a benefit.
- If an R&D intensity threshold is introduced, increase the expenditure threshold to $200 million so that large R&D-intensive companies retain an incentive to increase R&D in Australia.
- That the Government investigate options for improving the administration of the R&D Tax Incentive (e.g. adopting a single application process; developing a single programme database; reviewing the two-agency delivery model; and streamlining compliance review and findings processes) and additional resourcing that may be required to implement such enhancements. To improve transparency, the Government should also publish the names of companies claiming the R&D Tax Incentive and the amounts of R&D expenditure claimed.
How can I get involved?
Feedback on the findings of the R&D Tax Incentive Review from businesses is being sought from the R&D community, industry groups and other stakeholders.
Interested parties are invited to comment on the paper and provide feedback on the findings and the proposed recommendations. Previously provided submissions will also be considered.
You can register to attend a feedback session which are being held around Australia, or provide your feedback through our online survey.
Submissions can also be provided via:
- email – R&D Tax Incentive Review: firstname.lastname@example.org.
- post –
Department of Industry, Innovation and Science
GPO Box 9839
CANBERRA ACT 2601
Closing date for Submissions is Friday 28 October 2016.