The R&D Tax Incentive and 2019 – it’s High Time We All got Around the Table

December 6, 2018 Kris Gale

The recent Senate Economics Legislation Committee (SELC) Enquiry into the proposed R&D Tax incentive (the Incentive) legislation not only highlighted the previously-reported flaws in the reform package. It also pointed to the growing concerns in the Australian innovation marketplace about the current interpretation and delivery of the program by AusIndustry and the ATO. Considerable publicity has since been given to the fact that the R&D Tax Incentive National Reference Group (NRG) has not met since March 2017. This coincides with the period where there appears to have been a significant jump in the claims being disallowed based on legislative interpretations that appear to have shifted since the early years of the Incentive (2011 – 2015).

In terms of the Bill, the SELC has pushed its report back date from 3 December to 11 February which leaves very few sitting days for the Bill to be passed. The general consensus is that it is unlikely to get through in its current form. Consequently, attention is shifting to the apparent conflict occurring in the risk assessment/audit environment between taxpayers and the two regulators.

In recent weeks, two companies, Airtasker and Digiviser, have come forward to voice their concerns in the media about their experiences with AusIndustry. An article in the AFR this week reported that the claims of the two companies have been blanketly rejected, following extensive interaction with AusIndustry officials, with little being offered by way of explanation as to why the companies’ positions and evidence was deficient beyond statements from AusIndustry that the companies have failed to demonstrate that they met the eligibility criteria: https://www.afr.com/technology/tech-firms-including-airtasker-hit-by-rd-incentive-crackdown-that-threatens-software-sector-20181129-h18j51. It must be noted that AusIndustry isn’t able to respond to individual matters in the press but this doesn’t mean that the concerns raised should be discounted.

And, the value of the Incentive remains undisputed and was a key point of emphasis in the Crossroads 2018 Report released this week by Startup Aus: https://www.smh.com.au/business/small-business/innovation-has-lost-it-s-meaning-startupaus-20181204-p50k0u.html

MJA is aware of a growing divide between relevant stakeholders around a number of aspects of process and interpretation currently being delivered by AusIndustry and the ATO. The onset of the New Year seems an ideal opportunity to get the relevant parties around the right tables to make sure that the Incentive remains a stable and certain investment lever for the Australian innovation community.

Convening the NRG and widely reporting those discussions seems like a very good place to start.