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R&D tax incentive review paper released

The federal government has released an issues paper regarding the R&D tax incentive in an attempt to identify opportunities to improve its effectiveness and integrity.

Tax&Compliance Mitchell Turner 16 February 2016
— 1 minute read

The review of the R&D tax incentive has sought to bring tax benefits in line with the government’s new STEM-focused innovation push, which culminated in the recently launched national innovation and science agenda (NISA).


Business management consultant firm BSI Innovation noted that the review is a clear indication that Australian businesses continue to languish behind their OECD counterparts when it comes to R&D collaboration with universities and other research organisations.

“Less than 10 per cent of projects registered for the incentive in 2013-14 involved some degree of collaboration,” BSI added.

Outlined in the issues paper are the government’s potential changes to the R&D program which seek to encourage greater levels of additionality and spillovers. These include:

  • more prescriptive definitions of eligible activities
  • further adjustment of rates and thresholds to specifically target certain areas such as industry sectors, new claimants, start-ups or collaborative projects
  • requiring registration of eligible R&D activities prior to the conduct of these activities
  • changes to online administration processes and development of additional explanatory material
  • adoption of a single-agency delivery model.

BSI claimed that while it was expected that no firm recommendations were made regarding the future of the incentive so early on in the review process, it is reasonable to anticipate that some or all of the listed changes would come to fruition.

“It is also encouraging to see an explicit recognition of the importance of the program stability where possible changes to the definition of 'eligible activities' are considered.”

R&D tax incentive review paper released
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