Changes to the R&D Tax Incentive program have been passed by the parliament just days after the government confirmed revisions to its original proposal in the 2020-21 Budget.
Tha changes were passed with the support of the Labor opposition as part of the government's omnibus Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020 that includes a range of measures announced in last week's Budget.
The contentious changes to the R&D Tax Incentive program have been scrutinised and questioned by two Senate inquiries with the government finally relenting on aspects of the proposed reforms.
In last week's Budget, the government increased the refundable component of the R&D Tax Incentive by five per cent increase and scrapped the $4 million cap on annual cash refunds. It also simplified the proposed intensity threshold measure by reducing it from three tiers to two.
AusBiotech, which led the opposition to the original proposal, welcomed the government's partial back down.
"The announcement demonstrates the Government understands how Australia’s post-COVID-19 recovery will be supported by business expenditure for research and development (BERD) and has provided a welcome change of position on the RDTI that will support and incentivise growth in R&D and manufacturing as we recover from the pandemic," said the association in a statement.
"Compared to the reforms before the Senate, the Government is investing a further $2 billion in the RDTI over the forward estimates, that’s $240 million over the forward estimates compared to current policy settings," said AusBiotech in response to the Budget.