8 February 2020
As you are aware, the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 (the Bill) was introduced to the House of Representatives on 5 December 2019. It will return to the House on 6 February 2020 and will then be discussed by the Senate.
The response from the health industry community has been rapid. BioMelbourne Network has been working with AusBiotech in relation to this to ensure co-ordinated responses. This includes letters to the cross-bench Senators describing our opposition to the Bill.
In particular we have described the importance of the R&D Tax Incentive (RDTI) as a highly valued program designed to support innovative R&D undertaken by Australian businesses.
We have noted the following:
- Importance of RDTI to start-up and early stage SMES, as well as to larger local and international companies.
- Negative impacts of the proposed changes, including on employment of STEM trained graduates.
- Unforeseen consequences:
- The proposed changes will not stimulate R&D and will not improve quality of R&D, but will reduce the incentives for Health Industry companies to invest in R&D.
- The budget gain will be in consolidated revenue, and not directed to supporting R&D. It is therefore a cut to R&D funding in Australia. The impacts are on slower growth and therefore fewer highly skilled jobs, increased off-shore licensing earlier, and for larger companies, less research activity, clinical trials and investment.
- Complexity of the proposed amendments include flawed incentives of the Intensity Measure for companies with turnovers >$20M.
- Lack of clarity associated with expenses that can be claimed in relation to clinical trials.
- Impact of ongoing changing policy on Australia’s international competitiveness for pre-revenue companies, SMEs and companies above the $20M turnover threshold.
- Tax offset rates that undermine the benefits of the RDTI for small companies.
- The impact of the changes being retrospective from 1 July 2019.
For an update, please see the June 2020 Update, including a copy of the submission.