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Highly anticipated R&D changes missing from budget


One mid-tier has indicated that businesses will feel disappointed that the budget didn’t include any significant measures to support innovation, despite positive news that the R&D Tax Incentive remains.

By Lara Bullock 11 minute read

The recent Finkel-Ferris-Fraser (FFF) Review of the R&D Tax Incentive included controversial recommendations that were widely viewed as damaging to business according to RSM Australia R&D partner Stephen Carroll.

While widely presumed that these changes would be included in the budget, no changes to the R&D Tax Incentive were made last night.

“Highly anticipated changes to the R&D Tax Incentive, in response to the Finkel-Ferris-Fraser (FFF) Review, were not included,” Mr Carroll said.


“This is positive news for innovative companies, as the changes were widely viewed as damaging and unnecessary by industry. However, it is unknown if the government will respond separately to the FFF Review at a later time.”

The budget did include some measures designed to support innovation, however overall the government fell short according to Mr Carroll.

“Minor changes were made to other innovation support programs, the largest target industry group being Advanced Manufacturing, with a particular emphasis on South Australia and Victoria,” he said.

“While innovation companies will be relieved that the R&D Tax Incentive has not been cut back, there will be an overall feeling of disappointment that no substantial improvements to supporting innovation have been made as well as concerns that a future response to the FFF Review may still bring bad news."

The cost of the R&D Tax Incentive is predicted to increase from $2.9 billion in 2017-18 to $3.7 billion by 2020-21.

“Based on the current budget figures, industry feedback given during FFF consultation that budget modelling grossly overstates the cost of the R&D Tax Incentive still has not been incorporated,” Mr Carroll said.

“Therefore, pressure for the government to make changes will remain on the program due to perceived fiscal sustainability issues.”

Lara Bullock


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