The Government’s R&D Tax Incentive policy shows it has taken on board some of the concerns raised by submitters but today’s release leaves too many unanswered questions, National’s Research, Science and Innovation spokesperson Dr Parmjeet Parmar says.
“The policy is short on details of compliance requirements and how Inland Revenue proposes to police the scheme. Without that information, businesses can only hope they comply and are keeping the right records. The scheme has to be more than just a bonanza for tax consultants.
“It is essential that businesses have certainty over the details, especially since the Government is determined to roll this out in 2019 while the Treasury had recommended a start in 2020 to allow proper policy implementation.
“Megan Woods has previously said some 3000 companies were expected to be eligible for the tax credit but seems to have retreated from that target today by saying it will be more than 2000.
“Those that are ‘pre-profit’ will be covered by temporary arrangements subject to review down the track because the issues were too complex to resolve now.
“The Government has lifted its incentive from 12.5 per cent to 15 per cent of eligible R&D spending but that’s still below the 20 per cent rate that applies to Growth Grants under the existing programme.
“Changes in this version of the policy, including dropping the R&D spending threshold to $50,000 from $100,000 and what appears to be an expansion of eligible organisations, won’t come without extra cost yet the Government still claims it will cost $1 billion over four years.
“Australia’s comparable scheme ended up costing twice its original budget, so Ms Woods needs to explain how the Government will stay within budget.
“Small and unprofitable firms were able to find support under National’s innovation ecosystem. We understood that the big companies of tomorrow emerge from the risk-taking entrepreneurs of today.”