Members unite in response to R&D Tax Incentive Review

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More than 100 members have attended AusBiotech consultation meetings this week or made submissions, as the industry organisation prepares its response in the Government’s window for comment on the Review of the Research & Development (R&D) Tax Incentive.

AusBiotech briefings, held in Sydney, Brisbane and Melbourne with the support of Deloitte, were held to inform members and seek contributions to the crafting of the industry’s response to the ‘Ferris, Finkel, Fraser’ Review of the R&D Tax Incentive. The Federal Government has invited feedback on the Report’s six recommendations, until 28 October 2016.

Strong themes in response to the Report’s package of recommendations include:

  • International competiveness will potential be compromised by the efforts to reduce the programme, which is part of a package of benefits that attracts clinical trials and R&D investment to Australia;
  • Frustration that the R&D Tax Incentive programme, which is working so well for the sector, is again being targeted for cuts;
  • The Report notes that its recommendations seek to reduce complexity, however members are concerned that many of the recommendations add both complexity and will increase compliance costs, while also reducing benefit;
  • The uncertainty and instability that is being caused by the constant threats to the programme is causing havoc with long-term R&D planning, creating even greater uncertainty and discouraging the industry from investing.
  • There was concern about the proposed collaboration premium of up to 20 (recommendation 2) on a range of levels. While most agree that better industry/academic collaboration is required, the R&D Tax Incentive is not seen as the right ‘tool’ to achieve this. It was also seen as a distraction from the intended purpose of the programme, and would have to be funded from elsewhere in the programme, thereby taking further benefit away from innovative companies; and,
  • There is strong objection to recommendation 3, to place a $2 million cap on the refundable component of the programme that would disadvantage a significant portion of SMEs in the sector. The refundable component provides important cash-flow assistance to SMEs and increases the potential for additional investment in R&D.

AusBiotech is encouraging members to make direct submissions and also invites members to contribute vignettes about the impact of the proposed changes to the AusBiotech submission by contacting AusBiotech’s Deputy CEO, Lorraine Chiroiu ( 0429 801 118).

The Department of Industry Innovation and Science is holding consultation sessions around the country over the coming weeks, see the website for details.

The full Report and details of the consultation process can be found online.