New report confirms impact of R&D Tax cut


The Parliamentary Budget Office has confirmed that this year's Budget will include a $950 million hole due to the yet-to-be legislated cut in the R&D Tax Incentive.

The PBO has updated a previous report in which it calculated the impact of measures that were announced in the Budget but remain unlegislated.

The long list of measures includes the proposed 1.5 per cent cut in the R&D Tax Incentive, which has so far failed to win political support, equating to $950 million over the four-year forward estimates.

In effect, the proposal to reduce the value of the Incentive equates to a four-year $950 million cut in policy support for Australian-based R&D.

The Government did secure support from the Palmer United Party last year to cap claims under the popular and highly-regarded program but Labor and the Greens have maintained their opposition to the proposed 1.5 per cent cut.

The Government has maintained its commitment to cut the value of the R&D Tax Incentive, despite its stated and policy support for innovation, most recently highlighted in the release of its National Science and Innovation Agenda.

AusBiotech has cautioned the Government against changes that would reduce or dilute the benefit for the biotechnology sector.

The Incentive, which is considered a key and internationally competitive mechanism for Australia to attract investment in R&D, is also the subject of a review. The review was initially announced to be conducted by Treasury but will now be undertaken by the recently announced newly created national innovation agency.