Sixty million people are fed by Australian farming exports. With an ever-increasing global population, innovation in agriculture is essential to a sustainable future. However, the changes to the R&D tax incentive announced in the 2018 Federal Budget may be disadvantageous for industries like agribusiness. Up to 12,000 Australian companies could be affected by the R&D intensity change, which proposes that companies spend at least one percent of total business expenditure on R&D to qualify for the non-refundable tax offset.
The R&D intensity requirement will unfairly penalise industries who, by nature, do not spend as much money on research as high-intensity R&D industries like biotech and software. Agribusiness is a seasonal industry with very long-term projects. Increasing investment in long-term projects will have the best outcomes for improving efficiency and productivity. Yet farming and manufacturing businesses are already rethinking their plans to increase R&D spend, as they worry they will not meet the eligibility criteria.
Tim Burrow from Agribusiness Australia stated that it is counterproductive to disincentive agribusiness R&D. Farming R&D has a flow on effect and benefits not just the farmer but the wider community.
Local innovation is required to compete on a global scale and increase Australia’s farming productivity, which has been steadily declining over the past few years. Farming R&D activities include improving processing, irrigation and storage systems. Agribusiness often overlaps with IT and biotechnology, with autonomous tractors, improved stock feed and virtual fencing collars being developed to help combat stagnating productivity and yields. The industry is worth over $5 trillion USD and will only grow as the world’s population approaches nine billion.
If you would like to check whether your company is eligible for the R&D tax incentive, contact us for a free assessment.