The R&D Tax Incentive: The Ombudsman’s Report – An Opportunity To Get Back On Track

December 17, 2019 Kris Gale

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, is recommending a suite of reforms to the administration of the R&D Tax Incentive (the Incentive), as part of a comprehensive report released last week. The release of the report comes hot on the heels of the introduction of the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 

The report makes 24 detailed recommendations in relation to the following key themes:

•  where compliance examinations or audits are necessary, they should take place as close as possible to the first year of registration  of a project  
• guidance material needs to be comprehensive, clearer and up-to-date and developed in consultation with small business
• agency record keeping requirements be simplified and take into account commercial practicality for a small business
• small business must be assisted to help identify and retain professional and responsible R&D consultants

So there is much to absorb just prior to the Christmas break, a time where an immediate response is less than practical.

Future MJA Updates will address the issues in detail but, for now, we want to highlight the opportunities embodied in the report and the Bill.

The hard yakka will need to be done as Australia returns to work in January 2020.

Both documents underline the desire and the need to support Australian innovation. They arrive at a time where Australia’s Business Expenditure on Research & Development (BERD) has fallen below 1% of GDP, a result reflected in the falling cost of the Incentive and a dramatic decline in taxpayer participation.

Given that all parties – taxpayers; government; advisers; industry peak bodies – all want an Incentive that drives positive innovation behaviour and works as it is legislated, MJA advocates that this common wish drives the responses and the outcomes to both the report and the Bill.

With that creed in mind, we can then look forward with optimism to 2020 being the year when the Incentive and Australian innovation got back on the right track.

Should you wish to discuss this matter further, please do not hesitate to contact Kris Gale on 02 9810 7211 or email kris.gale@mjassociates.com.au