AusBiotech expressed bitter disappointment at the Government’s move yesterday to re-introduce legislation to cut the Research and Development Tax Incentive benefit by 1.5%, and urged the Senate to reject the legislation.
The ‘Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015’, tabled yesterday, includes the 1.5% cut which was originally announced in the May 2014 Federal Budget, but failed to get support in the Senate and the Bill was defeated last year.
The change will permanently impact companies while they are in tax loss, and adversely impact the same small businesses that were singled out for special support in the year’s Budget with a 1.5% corporate tax cut.
Dr Anna Lavelle said: “While this cut and its flow-on impact may appear small or inconsequential, it will specifically disadvantage small pre-revenue and start-up companies, which runs completely counter to Government rhetoric on small business and indeed the policy intention of the R&D Tax Incentive.”
A 1.5% reduction to R&D Tax Incentive will also remove any benefit of the 1.5% reduction to the corporate tax rate for small businesses announced in the 2015 -16 Budget and impact on the many pre-revenue small companies that are in tax loss and therefore don’t pay corporate tax.
“We urge the Senate to again reject the legislation and preserve the R&D Tax Incentive in-tact for the good of Australia’s innovation ecosystem.”
“This disadvantage to companies in tax loss will discriminate against small start-up biotechnology and other R&D-based companies, which are exactly the companies that our economy needs to fuel innovation growth and the high-skilled jobs that result.”
AusBiotech also contends that the constant threats and tweaks to the R&D Tax Incentive are unsettling for biotechnology developers and undermine business confidence at a time Australia can least afford to falter.
In public policy terms, the 2011 introduction of the R&D Tax Incentive was a momentous and pivotal inflection point for Australian innovation. The Incentive is actively attracting companies from around the world to bring their R&D to Australia and supporting medical R&D via small innovation companies.
The R&D Tax Incentive was very well received by the industry and its intact preservation remains the number one public policy issue within the industry. Since the R&D Tax Incentive’s implementation the annual Biotech Industry Position Survey (2013 & 2014 & 2015) has ranked the Incentive’s integrity amongst the industry’s most pressing public policy issues, with survey respondents repeatedly expressing their support of the program and concern that it might be reduced or withdrawn.