May 10th, 2023
The Labor Government previously handed down their first (mini) budget in October 2022 and has now handed down their first full budget in the traditional May timeslot.
Leading into this budget, there was not anticipated to be any changes proposed to the R&D Tax Incentive, since the previously announced changes for FY22 had only recently been legislated by the previous Coalition government, and were passed with support from the (then) Labor Opposition. Industry Minister Ed Husic had also noted to the Media in March 2023 words to the effect that:
- ‘improved measures to incentivise R&D spending are under consideration for the May budget, but no changes to existing tax incentives are planned, and nothing will happen without industry consultation’
Based on a preliminary review of the May 2023 budget material, no material changes seem to have been proposed to the R&D Tax Incentive, which is welcome news.
Some extracts of note from the budget papers include:
- Budget papers for the TREASURY PORTFOLIO, the budgeted expenses for the Research & Development Tax Incentive are noted as:
- 2022-23 estimate: $3,555,000,000;
- 2023-24 estimate: $3,315,000,000;
- 2024-25 estimate: $3,416,000,000;
- 2025-26 estimate: $3,509,000,000;
- 2026-27 estimate: $3,617,000,000;
- Budget papers for the INDUSTRY, SCIENCE AND RESOURCES PORTFOLIO mainly discusses the Research & Development Tax Incentive in terms of registration performance measures and Annual administered expenses;
- Budget Paper No.1 states:
- Expenses for the Research and Development Tax Incentive administered by the Australian Taxation Office are expected to increase over the period 2023–24 to 2026–27 due to the increases in number and value of expected claims following the reopening of international markets post COVID-19.
Some other measures announced in the May 2023 that may indirectly impact on R&D Claimants include the following:
- Funding for clean energy programs, including The Hydrogen Headstart program;
- Funding for accelerating the development of critical technologies industries including quantum tech and artificial intelligence;
- An Industry Growth Program replaces the Entrepreneurs Programme, and will provide advice and matched grant funding to small business from $50,000 to $5 million;
- Funding to continue the Single Business Service that supports SME engagement with all levels of government;
- Funding for cyber warden training;
- Small businesses with turnover of up to $10 million will be able to write off the value of new equipment worth up to $20,000;
- ATO Compliance Programs and Tax Practitioner Board (TPB) additional compliance measures announced in the previous October 2022 budget.
The current Labor government should be commended for leaving the R&D Tax Incentive unchanged for now, and hopefully stability is maintained in the coming years.