Celebrated American author, Joseph Heller, is best remembered for the towering achievement that was “Catch-22”. One of his lesser known (but highly enjoyable) reads is “Good As Gold”, the story of a middle-aged university English professor and author who is offered the chance for success, fame and fortune in Washington D.C. as the country’s first ever Jewish Secretary Of State. One of the chapter titles that has stayed with me since the book was released is “Nothing Succeeds As Planned”.
Words to live by, I reckon.
And certainly it’s a statement that could be applied to the fortunes of the R&D Tax Incentive (the Incentive) in recent years.
The Story So Far
The Coalition’s manufacturing policy in the lead up to the 2013 Federal election promised a comprehensive review of the Incentive as an input to the proposed Taxation White Paper. The idea of a specifically targeted ‘second’ Incentive for SMEs was mooted. Misgivings about Labor’s intention to exclude companies with an Australian assessable income of $20 billion or more were tabled. All the talk was about improving value and associated outcomes.
Well, nothing succeeded as planned. The Incentive is only now being reviewed by the Centre for International Economics, well after the close of submissions for the Taxation White Paper. To date, there has been no mention of a second program. The Coalition actually tried to get the $20 billion exclusion clause through the Senate and ended up succeeding with the fallback restriction of the $100 million R&D expenditure cap that was passed with no public consultation. A Bill to permanently cut the two R&D Tax Credit rates by 1.5% remains before Parliament some 18 months after the measure was announced in the 2014 Federal Budget. In other words, a result for the Incentive reflecting much less value and more restrictive outcomes.
Nothing succeeds as planned.
The Next Chapter
And now the market awaits the new Prime Minister’s Innovation Statement which may be delivered as early as next Monday. The clear expectation is that it will include significant announcements around the Incentive, along with a range of other innovation support measures.
Buzz words have informed the public discussion about the Incentive’s design going forward including ‘private-public sector collaboration’, ‘better targeted’, ‘finite resource’, ‘whole of project’, ‘business-as-usual’, ‘start-ups’ and ‘additionality’. The public discourse has not been matched by any public consultation around the nature of any changes or improvements. There simply hasn’t been time. As a result, there is a measure of concern, if not panic about what the announcement may contain, along with a healthy dose of optimism. The usual yin and yang.
My counsel is to relax, stay calm and make sure you don’t overeat early next week so you’ve got some space and time to digest the contents of the Innovation Statement. It may well have some problems and issues but it might just herald a new, more enlightened vision of the role of government in the Australian innovation paradigm.
And, remember, announcements are one thing. Legislation is another. There will be much public discourse and, hopefully, genuine consultation around the delivery and detail of the finalised measures.
What we hear next week won’t be the end of the matter. After all, nothing succeeds as planned.
Should you wish to discuss this matter further, please do not hesitate to contact
Kris Gale on (02) 9810 7211 or email email@example.com
MJA updates keep you informed on how government decisions will effect your business. This is a must if you want to know the latest on business and company insights without having to read and decipher complicated law and tax manuscripts.