Opposition says R&D Tax Credits bill seriously flawed

Shadow minister for innovation, industry, science and research Sophie Mirabella has hit back at government claims that the coalition is aiming a wrecking ball at its R&D Tax Credits legislation ‘sight unseen’.

The bill was re-introduced to parliament yesterday with the government hoping to have it voted on as soon as possible with a view to applying it retrospectively from July 1 this year.

But Mirabella said that the opposition has serious and legitimate concerns about both content of the legislation and the general lack of consultation between the government and the many industries which stand to be affected by it.

“The minister’s [ Senator Kim Carr } approach has been to ram it through with no consultation,” Mirabella said.

The government maintains that the new bill will greatly increase the number of Australian companies able to receive tax assistance for their R&D activities. However, the opposition contends that there is no evidence to support this claim.

“There is no modelling or evidence to show that more companies would have access to R&D funding,” Mirabella said.

She added that several business and industry bodies - especially in the manufacturing sector - have expressed concerns about the new bill, particularly those aspects concerned with the definition of core and supporting activities as well as feedstock.

The government is proposing two amendments to the bill, one regarding the definition of core R&D activities with the other providing additional words confirming that the tax credit can extend to experimental activities.

However Mirabella said that the amendments don’t go far enough, and that they are in effect a “slap in the face to Australian industry”.

Whilst being willing to support legislation which delivers a clear benefit to Australian businesses, she added: “But I can’t support a regime that is worse than the previous one.”

The opposition has also criticised the government’s plans to have the bill apply retrospectively from July 1 this year, claiming that this would disadvantage large numbers of Australian companies.

More importantly, however, the opposition cites reports from each of the four big accounting firms, all of which have expressed certain reservations about the likely effectiveness of the bill.

In a submission to the Senate Economics Legislation Committee Inquiry in May, Deloitte partner Serg Duchini expressed a number of concerns, leading him to conclude that “compared with the existing R&D Tax Concession the bill will not deliver improved outcomes, administrative simplicity and transparency for many Australian corporates.”