Big businesses against R&D tax exclusions

January 31st, 2014

The recent submissions to the Economics Legislative Committee were an opportunity for business’ to voice their opinions on recent proposed R&D tax exclusions put forward in the Tax Laws Amendment (Research and Development) Bill 2013. Swanson Reed supported the proposed changes in our submission due to potential benefits to SMEs and the Australian economy (Click here to view our blog on our submission). However big businesses have used the opportunity to fight the proposed changes.

The Australian reported on the submissions stating that “Sharemarket-listed giants including Telstra and Caltex, as well as groups like the Minerals Council of Australia (MCA) – whose members include Rio Tinto and BHP Billiton  – yesterday wrote to the Senate in a bid to block the $1.1 billion cut to the tax breaks”.

Submissions by some of the largest corporations in Australia opposed the changes for the following reasons:

  • The MCA submission stated “the cost to Australia’s economy of reducing incentives for innovation, including longer term impacts of such as competitiveness and productivity, will likely far outweigh the short term revenue gain of $1.1 billion”.

  • Telstra in their submission admitted that “the incentive is not the only reason Telstra undertakes R&D onshore “ however stated that “any change to the nature of the incentive will be considered by Telstra as a factor in undertaking our business”.

  • Caltex voiced one of its main concerns with the legislation as being “turnover can be a poor measure of profitability… the tax incentives changes will unfairly impact on a small number of companies, such as Caltex, which have high assessable incomes but relatively low profits”.

Swanson Reed provided an objective analysis of the proposed R&D tax exclusions, concluding the proposed changes beneficial and offered recommendations to the government to ensure a stable taxation regime and a commitment to innovation in Australia.

R&D Tax Incentive - Swanson Reed Specialist R&D Tax Advisors