The R&D Tax Incentive: A Golden Opportunity To Do Its Bit

March 24, 2020 Kris Gale

With the world attempting to come to grips with the COVID-19 situation, it’s hard to find too many opportunities for good news but recent discussion regarding the R&D Tax Incentive (the Incentive) is one of them.

As you have heard in recent MJA Updates, the Senate Economics Legislation Committee (the Committee) is currently conducting a review into the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019. 45 public submissions were received and thankfully are available on the Parliamentary website here.

The submissions strongly echoed the opinions previously expressed by MJA that the second version of the Bill was virtually unchanged from the first version that was unanimously rejected by the Committee. Arguably, it was in worse shape with the changes to the intensity premium for Non-Refundable Offset claimants.

These views were set to be tested at a public hearing on Tuesday, 31 March at the Portside Centre in Sydney. At the time of writing, no program has been published for the hearing and it appears unlikely to go ahead in the current environment. 

And it’s that current environment that is fuelling demands for a fresh look at the Incentive. At the forefront of the demands is the recommendation that Refundable Offset participants should be given the opportunity to make an early claim when a cash refund is likely to be owing. For most companies, the concept would be a claim for expenditure in line with claims made for the previous year (presumably with a reconciliation as at 30 June). What began as a thought bubble has quickly escalated into a petition set up by Catapult’s executive chairman, Adir Shiffman. It has more than 1500 signatories and the support of key Australian innovation voices including Melanie Perkins (Canva), Daniel Petre (AirTree Ventures) and Scott Farquhar (Atlassian).

Apart from the early payments option, the petition also calls on the Federal Government to suspend the Committee’s inquiry into the Incentive changes for at least six months and introduce a six-month moratorium on ATO clawbacks against recipients for the scheme who have payments owing as a result of audits.

This article from InnovationAus gives further insight.

MJA supports any move that sees the Government considering these options as a matter of urgency. The Incentive is an established funding mechanism that could deliver financial support to a vast number of Australian companies immediately. It’s what the Refundable Offset was set up for: to increase the chance of success (which right now translates as survival) of Australia’s innovators. As Australia pulls together, the Incentive has a golden opportunity to more than do its bit.

Should you wish to discuss this issue further, please don’t hesitate to contact MJA Chair, Kris Gale, on 0411 171 596 or kris.gale@mjassociates.com.au. Like many of you, he is at his home desk and he is keen to talk.