R&D budget changes and impact
R&D activities are crucial to sustained economic growth and improve the standard of living through the accumulation of new processes and products, the quality enhancement of current ones. This increases profitability of corporation by building up productivity and diminishing operating costs.
However, the changes to the R&D Tax Incentive will disproportionally impact across the economy depending on the level of innovation intensity, especially biotechnology, medical technology and pharmaceutical sector where many organizations will be affected by the changes, either directly/indirectly in the foreseeable future.
1. Raise the max amount of R&D expenditure eligible
a. the 43.5% refundable offset (companies with turnover of less than $20 million);
b. Or 38.5% non-refundable offset (companies with turnover of $20 million or more) from $100 million to $150 million;
2. For organizations with an aggregated annual turnover above $20 million, a marginal R&D premium is announced depending on the incremental R&D intensity.
3. For companies with aggregated turnover below $20 million, the refundable R&D tax offset will be applicable for a premium of 13.5 percentage points that is above an organization’s tax rate.
4. Cap cash refunds from the refundable offset to $4 million per year (Note: R&D tax offsets in excess of the $4 million will be carried forward and become non-refundable tax offsets in future years. Also, expenditure on "clinical trials" will be exempt from this $4 million cap.)
5. Publicly disclose claimant details and the R&D expenditure. This includes increasing the
ATO and AusIndustry’s capacity to enforce the laws and provide crucial guidance to claimants;