R&D Tax Incentive remains untouched as tax reform stalls

The newly introduced R&D Tax Incentive should remain as it is for the foreseeable future following the failure of the government’s appointed Business Tax Working Group to agree on how best to cut Australia’s corporate tax rate.

An earlier draft report had the R&D Tax Incentive as one of the programmes that could be trimmed in order to fund a corporate tax rate cut.

With the failure of the BTWG to make any firm recommendations, the R&D Tax Incentive is no longer targeted for potential cuts.

AusBiotech and the biotechnology industry lobbied hard for the retention of the R&D Tax Incentive, which gives a 45 per cent rebate on R&D expenditure for companies with a turnover of less than $20 million, and a 40 per cent rebate on companies with greater revenue.

The Tax Incentive has already been employed by biotechnology companies such as Bluechiip.

The Working Group found that a reduction in the corporate tax rate of 2-3 per cent would be beneficial to the economy, but could not agree on how to fund such a cut in a revenue neutral way, which was part of the terms of reference given by the government.