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Commentary in Tax Institute’s TaxVine Journal calls for Stability to R&D Tax Incentive

This week’s TaxVine Journal (the weekly publication of The Tax Institute) featured some commentary from Mariana von Lucken of HLB Mann Hudd, supportive of the Government’s budget announcements and echoing Swanson Reed’s previous calls for stability to the R&D Tax Incentive.

Notable extracts from the writer’s observations and opinions in this week’s article include:

• “the Government should stop fiddling with the R&D tax incentive, as the indecisiveness of the Government has created instability for claimants and made the innovation community cautious;

• the world is becoming more competitive and Australia must stay ahead of the game and keep improving. The number of OECD countries providing R&D tax incentives has increased from 19 countries in 2000 to 30 countries in 2020, making it a competitive playing field. Still, Australia sits above the median;

• R&D applications and spending have decreased in Australia between FY16 and FY19;

• The recent Government reform to the R&D tax incentive has been made more generous in order to ensure that Australia thrives in the future;

• hopefully the outcome of the Federal Budget 2020–21 is that the Government stop fiddling with the R&D tax incentive. This will allow the innovation community to regain confidence and start increasing their R&D work”.

Some comments in this week’s TaxVine Journal article diverged from those published in November 2019 by Professor Bob Deutsch, Senior Tax Counsel at The Tax Institute. Bob had called for a narrowing of the eligibility in the R&D Tax Incentive to industries where Australia had a competitive advantage: Medical and Energy technology.

These published differing opinions show that the Tax Institute is a broad church of wide views, something to be celebrated. Professor Deutsch should also be applauded for publishing Swanson Reed’s reply to his November 2019 article in TaxVine 46, whereby we stressed it was critical that the R&D Tax remain a broad based incentive.

Swanson Reed applauds the government for the recent reform to the R&D Tax Incentive, and notes that Labor did not oppose the latest reforms. We call on both sides of politics to now commit to a stable, broad-based R&D Tax Incentive.