The Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 was tabled into the Federal Parliament just prior to the end of 2019. However, given the concerns with the proposed changes, it has been referred to a Senate review committee as per the first failed attempt to revise the R&D tax program.
To aid its review, the Senate committee has called for submissions on the proposed changes to be provide by 6 March with the committee to release its findings by 30 April 2020.
The Bill seeks to introduce changes to the R&D tax program that closely resemble changes to the program first announced in the 2018 Budget and which had previously been debated within Parliament and referred for review by a Senate committee.
The Senate committee rejected the Government’s first attempt to revamp the R&D tax program due to concerns relating to the uncertainty of the proposed changes and the retrospective nature of the changes. Despite some tweaking of the calculation of the R&D tax offset for large claimants, the new Bill has retained many of the changes to the R&D Tax Incentive that were previously rejected by the Senate committee and broadly criticised by Australian businesses.
Industry Minister Karen Andrews recently defended the changes stating, “the government wants to encourage businesses to back themselves – to promote even more investment in R&D. We have listened to businesses and are introducing reforms to simplify, target and improve the system”.
Unfortunately, the new Bill provides little encouragement for Australian businesses to increase investment in R&D and, in their current form, promote uncertainty and complexity for claimants in comparison with the current program. To illustrate:
The impact of the proposed changes will undoubtedly discourage rather than encourage investment in R&D, particularly for manufacturers and other large businesses with annual revenue of more than $20mill.
If you are interested in making a submission on the changes to the R&D tax program, please note the deadline is this week, Friday 6 March.
Please contact the R&D tax experts at Glasshouse Advisory for more information on the R&D tax program and advice on how the proposed changes might impact your ability to access tax benefits through this program.