A consultation on the ‘Ferris, Finkel, Fraser’ Review of the Research & Development (R&D) Tax Incentive and its recommendations will receive a strong message objecting to the recommendation of a $2 million cap on the refundable component of the programme that would disadvantage a significant portion of SMEs in the sector.
The report’s launch last week marked the commencement of a consultation period, which is now open until 26 October with feedback invited on the six recommendations. AusBiotech members are urged to share their views on the report to assist is the development of the industry’s response.
The Report, which was completed in April 2016, comes following and therefore without regard for the recent 1.5 per cent cut across the entire programme, saving the Government a reported $600 million.
The unrelenting threat to the R&D Tax Incentive and efforts to trim and cap is unsettling for an industry that takes many years to develop each treatment, diagnostic, cure and medical device.
Overseas companies and investors are already reporting that they are pulling back plans to bring clinical trials and research investment to Australia, causing havoc with planning, creating even greater uncertainty and discouraging the industry from investing.
On a positive note, amongst other recommendations there is a welcome acknowledgement that the $100 million cap that was placed on the programme last year is too low and should be raised, along with the introduction of intensity measure. While the intensity measure would ensure appropriate preferential treatment to R&D-intensive companies, like biotechnology companies, the detail and the implications are at this stage unclear.
The report also contains support to revive the much-needed quarterly payments, which AusBiotech has been advocating in support of for many years. Notable in the report is the comment that the estimated cost of implementation is a one-off bring-forward cost, but there would be no on-going cost impact. A survey conducted by AusBiotech indicated the timing of the receipt of payments (ie, quarterly or annually) is a critical factor in its value as an incentive for additional R&D activities.
AusBiotech welcomes the Federal Government’s willingness to seek submissions and consult widely before finalising a response by the end of March 2017.
The Report and details of the consultation can be found online.
AusBiotech invites members to comment directly by contacting AusBiotech’s Deputy CEO, Lorraine Chiroiu (email@example.com/ 0429 801 118).