AusBiotech says it is 'astonished' with the federal government's plan to proceed with cuts to the R&D Tax incentive despite the findings of a Senate inquiry.
The government has tabled legislation enabling changes to the program the sector says will disadvantage the "vast majority" of small to mid-size life science companies.
The pre-election inquiry, which was led by a government Senator, recommended the government re-examine the impact of the changes before proceeding.
The changes include fixing the rate of the refundable R&D tax offset to 13.5 per cent and the introduction of a simplified R&D Premium for conducting ‘high intensity’ R&D for companies with an annual turnover of more than $20 million.
The government has agreed to increase in the R&D expenditure threshold rate from $100 million to $150 million. However, this will impact a very small number of companies.
It has maintained the clinical trial exemption for the new $4 million cap.
"While the protection of clinical trials is welcome, it has been tempered by the high degree of confusion that remains about the definition of 'clinical trial' and which expenditure would be eligible for the RDTI under the proposed changes," said AusBiotech in a statement.
Lorraine Chiroiu, CEO, AusBiotech said, “AusBiotech is deeply concerned that the RDTI Bill has been reintroduced, despite the Senate Committee’s recommendations to ‘defer consideration’ of the Bill until ‘further examination and analysis of the impact is undertaken’.
"The Australian life sciences industry has been caught in the cross-fire. The unique environment we work in, and the life-saving and life-improving benefits we bring, must be better considered before these changes cause long-term damage to the industry.”
The association said it plans to launch new sector-specific modelling, illustrating for the first time the disproportionately negative effect that the previously proposed RDTI changes would have on the life sciences sector.
The new report - R&D Tax Incentive: Additionality and spillovers for the life sciences industry - shows that 61 per cent of respondents advised that the proposed changes would not only affect their expenditure on R&D but would also threaten the sustainability of their businesses.