Business Tax Working Group discusses cuts to R&D Tax Incentive
Thursday, 23 August, 2012
The Business Tax Working Group (BTWG) was established by Treasury “to make recommendations on how the business tax system can be improved to make the most of the challenges and opportunities arising from transformations in the broader economy…and that aim to increase productivity while delivering relief to struggling businesses.”
The discussion paper aims to stimulate discussion, debate and feedback and comment is invited until 21 September. AusBiotech will be making a submission and invites members who wish to contribute comment to contact Communication Manager, Lorraine Chiroiu or phone 03 9828 1400 by 19 September.
The BTWG will is seeking reforms that “can increase productivity and deliver tax relief to struggling businesses in our patchwork economy” and has been asked to identify offsetting savings from within the business tax system or business expenditure programs to fund any recommended reforms.
More specifically, the group has been asked to make revenue-neutral reforms. The sought-after cut in the corporate tax from 30 per cent to 25 per cent would cost $26 billion over the next four years according to Treasury costings.
The government has asked the group to fund any cuts to tax rates from savings in the business tax system and the discussion paper makes suggestions totalling about $10 billion, including less than $1 billion from cuts to the R&D Tax Incentive.
The four options to limit the R&D Tax Incentive are all variations aimed at the 40% offset for companies with turnover above $20 million.
AusBiotech is opposed to any move that will reduce the R&D Tax Incentive, especially in its infancy. The program was initially implemented to support innovation in Australia and to encourage the spill-over benefits that investment in R&D bring to the economy. The incentive is so new that the form to claim it has been available for only six weeks. With companies able to take 10 months to claim form the end of the financial year, it is still very early days in terms of the program’s implementation.
The full discussion paper from the BTWG can be found here.
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