When the federal government announced in December 2019 that they would reintroduce their previous R&D Tax Reform bill with a proposed start date of July 2019 for FY20, it was met with widespread condemnation from industry leaders.
The bill reintroduced at that time was largely focused on savings measures, and was a slightly modified version of a previous reform bill, which did not pass through the Senate. The Senate Economics Committee had noted concerns around the proposed intensity threshold and refundable offset cap that were at the centre of the reform proposals.
The Government’s R&D tax budget announcement on 6 October largely backed away from the controversial retrospective reforms, and contained some additional benefits not previously anticipated which are to apply from FY22. These budget measures favourably exceeded expectations of those who were watching closely, and have largely been applauded by Industry.
The opposition Labor party this week has labelled the reforms as a “missed opportunity”. In an article authored by Innovation Spokesman Kim Carr, the following was noted:
Swanson Reed notes that there is some merit in what Mr Carr has outlined in his article in respect of the complexity of Intensity Scales. We do note however that the Government’s budget revised reform bill is a vast improvement over the bill announced in December 2019, given that:
And whilst a collaboration premium would have been nice, given the large cost of government stimulus already provided by COVID measures, we concede that a line had to be drawn somewhere, and would happily accept this version of reforms over what was previously proposed.
We also note with concern that in recent months, Labor itself and indicated potential alternate radical reform to the R&D Tax Incentive, with Clare O’Neil stating in September:
Swanson Reed notes that Labor did not oppose the latest reforms announced in October, and now call on both sides of politics to commit to a stable , broad-based R&D Tax Incentive.