Home » News » December 2023 MYEFO indicates cost of R&D Tax Incentive is growing

December 2023 MYEFO indicates cost of R&D Tax Incentive is growing

January 9th, 2024

The 2023‑24 Mid‑Year Economic and Fiscal Outlook (MYEFO) was released by the Government in December 2023.

New estimates within MYEFO show the R&D Tax Incentive (‘RDTI’) is expected to cost an extra $2.1 billion over the next four years, including an additional $432 million in FY22-23.

According to the report, the increase is being driven primarily by claims arising from biomedicine, artificial intelligence, and machine learning activities.

It’s part of a growing trend: software claims accounted for 30% of RDTI registrations in FY19-20, then 36% in the following year, and more than 40% in FY21-22.

The forecast increase comes as the federal government’s spending on R&D as a proportion of GDP hits an all time low, according to data from FY21-22, it’s at 1.68%, well below the OECD average of 2.5% in 2019.

The government has previously committed to pushing the economy’s total spend on R&D towards 3% of GDP.

InnovationAus.com conducted detailed analysis of the RDTI figures in the December MYEFO and also sought direct comment from Treasurer Jim Chalmers.

The Treasurer responded:

  • ‘the government seek to get maximum economic advantage out of technological change;
  • ‘We need to get much better at adapting and adopting technology. It’s a huge part of modernising our economy and maximising our advantages.’
  • ‘We haven’t announced any changes or any new data about the impact of the research and development tax incentive, but we are looking more broadly, to make sure that we’ve got the arrangements right … to make the most of tech change.”

Swanson Reed notes and concludes the following regarding the RDTI figures in MYEFO:

  • When in opposition, the Labor party (via Industry Minister Ed Husic) indicated that they may make the RDTI more friendly to software based startups and stated that:
  • ‘Labor absolutely and fundamentally recognises the powerful place occupied by the RDTI in the minds of the Australian startup community, and we do not want to make changes that affect the startup community’s ability to access the incentive’;
  • ‘the Australian startup community should not be affected negatively by reforms to the R&D Tax Incentive, which they have consistently said to me is the most important form of government support for their work’;
  • The RDTI having growing funding over the next four years hopefully indicates that the Labor Government is honouring commitments to preserve RDTI and boost R&D Spending;
  • Stakeholders involved with the R&D Tax Incentives should notehowever that it is clear based on recent comments from programme regulators (AusIndustry and ATO) that compliance activity will increase in the coming months. This may or may not be in response to increasing programme cost;
  • Swanson Reed encourages all sides of politics to commit to preservation of a stable R&D Tax Incentive;
  • Swanson Reed recognises the important role the programme regulators (AusIndustry and ATO)  play in governance of the system, and we seek to work alongside them to maintain the compliance integrity of the programme.

 

Post a Comment

(*) indicates required field.

Are You Eligible?


Click here for the R&D Eligibility Wizard

R&D Audit Checklist


Click here for the R&D Eligibility Wizard

Categories

Archives

 
 
 
  
 
 
 
 Posted on Google Google 
 
 Daniel McGregor  profile picture 
 
 
 Daniel McGregor  
 
11. August, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
I have been using Swanson Reed for my clients for more than a decade.  Having a specialist firm that can provide practical and commercial advice that produces real outcomes is very important and we have received great feedback from our clients. Highly recommended.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 John  profile picture 
 
 
 John  
 
15. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
Damian and the rest of the team at Swanson Reed have been supporting us for several years.  We always appreciate their insights, expertise, and efforts.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Rueben Rajasingam  profile picture 
 
 
 Rueben Rajasingam  
 
6. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
Experienced responsive Team. They have been a great help to me and my company navigate the R&D tax claim process and have provided invaluable advice.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Enrique Esquivel  profile picture 
 
 
 Enrique Esquivel  
 
6. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
Damian and the team at Swanson Reed have been extremely helpfully and professional during all of our consultations. Highly recommended.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Jess at Y&C  profile picture 
 
 
 Jess at Y&C  
 
3. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Anatole Kononewsky  profile picture 
 
 
 Anatole Kononewsky  
 
2. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
The Swanson Reed team have provided our company with exceptional professional advice and assistance for all of our R&D claims for many years - have always achieved great results with excellent value for their services.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Payam Toloo  profile picture 
 
 
 Payam Toloo  
 
2. June, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
Damian Smyth and his team are very helpful, supportive and experts in their field of R&D Tax claims. I'm always happy with the work they do and been a customer of their for over 5 years.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Melissa Doddy  profile picture 
 
 
 Melissa Doddy  
 
31. May, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
The Team at Swanson Reed are very experienced R&D Tax Advisors and gave us ongoing support with all of our R&D Claims, the consultants ensured we were always working with current legislative guidelines, gave us assistance with compiling technical and government documentation and went out their way to ensure they were with us for the entire process from beginning to end.  Highly recommended to anyone who needs assistance with working through what can at times be a daunting process.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Gary Watson  profile picture 
 
 
 Gary Watson  
 
31. May, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
We can highly recommend Swanson and Reed as an R & D accountant. We have worked with them for several years now as they make our R & D claim so easy and communicate quickly with both us and our accountant.
  
 
 
  
 
 
 
 Posted on Google Google 
 
 Rob van den Bergh  profile picture 
 
 
 Rob van den Bergh  
 
31. May, 2022
 
 
 Google star 1Google star 2Google star 3Google star 4Google star 5Trustindex verifies that the original source of the review is Google. 
 
Always professional.
  
 
 
  
 
 
Load more