Tag: backflips

Budget 2020: Federal government backflips as R&D tax incentive receives AU$2b boost

In handing down its 2020-21 Budget, the Australian government has opened its wallet to provide a AU$2 billion boost in additional research and development tax incentives (RDTI), touting that the amount will help businesses manage the economic impacts of the COVID-19 pandemic.

“Research and development, the adoption of digital technology, and affordable and reliable energy will be critical to Australia’s future economic prosperity,” Treasurer Josh Frydenberg said during his Budget speech.

The federal government detailed in its Budget documents that for small companies, with total annual turnovers of less than AU$20 million, the refundable R&D tax offset will be set at 18.5 percentage points above a company’s tax rate, and the AU$4 million cap on annual cash refunds will be canned.

Meanwhile, for larger firms, with annual turnovers of AU$20 million or more, the government said it will reduce the number of intensity tiers from three to two.

“This will provide greater certainty for R&D investment, while still rewarding those companies that commit a greater proportion of their business expenditure to R&D,” the government stated.

The changes will commence from 1 July 2021, with Frydenberg touting that the changes would help more than 11,400 companies that invest in research and development.

Read also: Australian tech unicorns say R&D scheme misses the mark

The government also confirmed all other aspects of the 2019-20 mid-year economic and fiscal outlook, including the increase to the R&D expenditure threshold from AU$100 million to AU$150 million per annum.

The announcement follows recent calls by the country’s startup ecosystem for government to amend the R&D tax incentive, as they are concerned with the proposed changes to the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019.

In February last year, the Senate Economics Legislation Committee asked for the R&D Bill to be taken back to the drawing board, saying at the time it recognised the need for government to maintain public confidence in the integrity and financial sustainability of the R&D tax incentive, but that it was not confident the introduced measures would provide exactly that.

For other parts of the research community, the federal government has handed the Commonwealth Scientific and Industrial Research Organisation (CSIRO) an extra AU$459 million over four years as part of 2020-21 Budget. The government said this cash injection would help CSIRO “address the impacts of COVID-19 on its commercial activities and ensure it is able to continue essential scientific research”. 

The additional funding for CSIRO is timely, given its ON program wrapped up in the middle of this year, after funding for it dried up. The Australian government had previously handed it AU$20 million over four years under its AU$1.1 billion National Innovation and Science Agenda to help commercialise the country’s research. 

See: Team Australia: CSIRO’s multimillion-dollar post-coronavirus plan

In this latest Budget, AU$1 billion has also been allocated to support universities’ costs of research.

Specifically, this will include AU$41.6 million over four years to together universities and local industries to partner on innovative reform projects; AU$20 million over

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