In December 2019, the government re-introduced a bill to reform the R&D Tax Incentive.

This bill was a slightly modified version of a previous reform bill (Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018), which did not pass through the Senate at that time. A Senate Economics Legislation Committee recommended in February 2019 that the initial bill should be deferred from consideration until further analysis of the bill’s impact is undertaken, particularly with respect to concerns around the proposed intensity threshold and refundable offset cap.

The R&D Tax Reform bill has been uniformly criticised by companies, industry groups and R&D tax professionals, with concerns particularly directed at the “Intensity Threshold” proposal, which would punish companies with large cost bases, such as local manufacturers.

The Senate Economics Legislation committee public hearing on the revised bill was conducted on Monday 29 June.

Media reports since this hearing have reported further criticism of the bill from political parties whose support may be required to secure passage of the reform through the Senate:

With the Labor party posed to vote against the proposed R&D Tax Reform bill, its passage seems likely to depend on the view of the cross bench senators.

Swanson Reed’s position is that:

We call on both sides of government to commit to a stable R&D Tax Incentive, and are of the view that the programme would be most effective in achieving its policy objectives if not subject to further proposed changes.