Following a brief consultation on the R&D Tax Incentive (RDTI) reform package, the legislation has now entered the Parliament in the “strangely” titled: Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018.
CEO of AusBiotech, Lorraine Chiroiu, said: "Given the RDTI reform package will immediately hit biotech SMEs with a 2.5 percent loss of refund if passed, the package is strangely titled and cuts for companies commercialising medical research that has typically come from our medical research institutes and universities.”
A new calculation method for the RDTI benefit will see start-up biotechs with turnover under $20 million, and in tax loss, lose a much-needed portion of their cash refund. Eligible expenditure, previously resulting in a 43.5 percent claim, will now be eligible for only a 41 percent refund.
“These vulnerable enterprises developing new therapies, devices, vaccines and diagnostics rely on a unique business model where they need intensive and large cash amounts to fund pre-clinical and clinical trials to reach regulatory approval and patients,” said Ms Chiroiu.
“We urge the Government to consider the potential damage that will be caused to this burgeoning sector and the negative impact on its work in early clinical and pre-clinical trials, if this legislation pushes ahead in its current form.”
“For each $1 million of expenditure, the loss will be $25,000 that has to be raised by alternate means.”
In addition to the new calculation method of the RDTI benefit will see start-up biotechs with turnover under $20 million and in tax loss, lose 2.5 percent of their cash refund, AusBiotech raised concerns about other key issues:
- The mechanics of the widely-welcomed carve out for clinical trials still has many unanswered questions;
- Larger companies in the sector are grappling with the impacts of a new intensity measure that will see a reduction in support for most, a significant layer of complexity and uncertainly about eligibility added.
The bill can be found online.