The enabling legislation for proposed changes to the R&D Tax Incentive has officially been referred to a Senate inquiry.
The government failed in a bid to block the inquiry. Labor combined with the Greens and crossbench Senators to back a review of changes opposed by the life sciences and biopharmaceutical sector.
The closing date for submissions is 6 March with the inquiry due to report by 30 April.
According to AusBiotech CEO Lorraine Chiroiu, “It’s disappointing to find that the Government is pushing ahead with plans to cut this pivotal incentive for R&D in life sciences, especially that the recommendations from the last Senate Inquiry were ignored in the new Bill. We hope that this Senate Inquiry can prompt a better outcome.”
The proposed changes were reviewed by a previous Senate inquiry that recommended they be delayed pending wider consideration of their impact on R&D investment.
During that inquiry, which was chaired by a Coalition Senator, officials confirmed they had not assessed the impact of the changes on R&D investment.
The changes include fixing the rate of the refundable tax offset to 13.5 per cent and the introduction of a simplified premium for conducting ‘high intensity’ R&D for companies with an annual turnover of more than $20 million.
The government has agreed to increase the R&D expenditure threshold rate from $100 million to $150 million. However, this will impact a very small number of companies. It has also maintained the clinical trial exemption for the new $4 million cap on the refundable component.