The Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 (the current Bill) was tabled into the Federal Parliament yesterday. This current Bill introduces changes to the R&D tax program that were previously referred to the Senate Economics Legislation Committee (SELC) earlier this year.
If the current Bill is successfully passed by both Houses of Parliament in February 2020 when Parliament resumes, the changes will take effect for FY20 claims. There are some differences between this current Bill and the previous changes announced in the 2018 Budget, the most notable being the intensity test for calculating the non-refundable R&D tax offset (for claimants with >$20MIL turnover).
The following table outlines the changes made in the current Bill for companies with a turnover over $20MIL:
The cap on expenditure has been proposed to be raised from $100 million to $150 million.
There continues to be an impact for small companies and SMEs (those with under $20MIL turnover) who will also see their refunds capped at $4MIL (with clinical trials being exempt).
Other changes include an attempt to simplify the feedstock, recoupment, clawback, and balancing adjustment provisions. Details of taxpayers’ R&D claims will also be made publicly available, including the amounts claimed (albeit on a delayed basis)
In summary, despite some minor amendments in the current Bill there remains strong negative impact to business investment in Australian based R&D if this current Bill is passed. In fact, this current Bill has still essentially retained many of the changes that were criticised in the original Bill and ignores the recommendations of the SELC inquiry.
Glasshouse Advisory will continue to keep you updated about the progress and impact of this current Bill and will endeavour to convey the messages around the potential detrimental impact these changes will have to Australian investment in innovation.
Please contact Glasshouse Advisory if you have any questions or would like to hear more about the current Bill.