The R&D Tax Incentive & The Federal Budget: The Sound Of Crickets

April 4, 2019 Kris Gale

After the (failed) attempt in last year’s Federal Budget to introduce an R&D Intensity measure to the Non-Refundable R&D Tax Offset in 2018/19, as part of a raft of cost savings, you’d be forgiven for expecting that a second crack was going to form part of last Tuesday’s Budget announcements. Yet all we got was the sound of crickets. Not a mention. Nada. Doughnut. What’s more, the word “innovation” seems have to been attributed Voldemort status as it didn’t get a run at all in the Budget speech.

But for the eagle-eyed, it was soon apparent that the Budget papers indicated that an additional $1.35 billion will be “saved” from the R&D Tax Incentive (the Incentive) across the forward estimates, adding to the $2.4 billion that was announced in last year’s Bill.

It’s unclear whether the additional cut is expected to be the result of a reduced number of claims going forward as a result of the current audit “crackdown” or if it is the result of planned amendments to the program, either through the passage of the current Bill (which is still on foot) or reworked legislation that the Government is planning to launch on the other side of the Federal election.

What is certain is that whoever wins government, reform of the Incentive remains squarely on the agenda. MJA will continue to keep you fully informed on where things stand on this crucial innovation policy instrument.

In the meantime, do not hesitate to contact Kris Gale on kris.gale@mjassociates.com.au or 02 9810 7211