Vacuuming the house, mowing the lawn, or even waiting for an image-heavy website to load – these are tasks, in an ideal world, which would be performed in haste. However tax policy changes, in particular, is an undertaking that one would hope is executed with time and consideration. In specific, recent updates have prompted the notion that the Australian government is placing academic research before considering critical industry insights.
To expand on this, according to the BDO, the new Innovation Statement is due prior to the finalisation of the R&D Tax Incentive registrant’s survey, which investigates key industry input. The Innovation Statement, predicted to be released on the 9th December, is anticipated to modify the R&D Tax Incentive and promote collaboration between the industry and the university sectors. However, with the absence of the industry survey, is the Innovation Statement being released too soon and what disruptive power could this have?
Whilst there is no denying that innovation is somewhat fuelled by ‘disruption’ and change has always been a constant in business, there has been growing concerns about what effect the Innovation Statement could have on industries. Nonetheless, despite firms making the majority of the investments that drive innovation, government action is vital in making innovation work for development and economic well being. However, one of the complications to constructing innovation is that it depends on on a combination of policies for innovation that go significantly further than just research alone.
Although it is impossible to know the exact steps the government will take in the future and whether or not they will involve results from the registrant’s survey – it is imperative to not completely neglect the importance of academic research. Public investment in research is crucial for innovation, with majority of the foremost technologies in use nowadays, counting the Internet and genomics, having their origins in public research. Moreover, by studying comparative OECD countries, it is clear to see businesses are participating more in fiscal consolidation and focusing increasingly on short-term benefits. In contrast, public research normally has more long term goals and paybacks. Hence, now is not the time for policies for innovation to be compelled exclusively by short-term benefits, but rather, a more holistic approach should be taken. For example, in order to strengthen support across fields, increasing transparent grants as a complement to tax incentives could help. These could be more suited to help the needs of young innovative firms and can be concentrated towards areas were government support can have the uppermost impact.
Certainly, policies for innovation function in a multifaceted, international, vibrant and tentative environment – where government action will not always get it correct. Thus, a pledge to observing and assessing policies, and to learning from history and amending policies over intervals, can help guarantee that government action is proficient and influences its goals at the smallest cost. Evidently, there is no magic bullet to fortify innovation performance. Nonetheless, focusing policies on these topics could assist governments in nurturing more innovative, industrious and thriving societies. Therefore, an integrated approach, encompassing industry input, academia, and small start-ups, would be ideal tactic in ensuring innovation is cultivated, long-term and short-term, throughout different fields. In the interim, the current R&D Tax Incentive allows business to generate considerable tax savings and Swanson Reed will be able to help you with any potential effects the new R&D Tax Incentive may have. Contact us today to talk to one of our Specialist R&D Tax Consultants and find out if your business is eligible for the grant.