Last night the federal budget was announced and the proposed cuts to the R&D Tax Incentive, proposed in a report by Bill Ferris, Alan Finkel, and John Fraser, did not go ahead.
The biotech industry has been particularly concerned about the recommendations, which included a $2 million cap on rebates for companies making less than $20 million a year. This was feared to potentially impact clinical trials and biomedical research commercialisation, particularly for smaller companies. AusBiotech CEO Glenn Cross has said the changes would “severely damage Australia’s burgeoning medical technologies and pharmaceutical sector.”
Although the government was to respond to the report by early 2017, there is still a possibility that the cap will go ahead in the next budget, once the new Minister for Industry, Innovation and Science has settled in.
The budget disclosed that 15,750 entities had registered to claim the R&D tax incentive in the 2016-17 FY, which amounted to $19.2 billion of R&D expenditure. Changes to business included a $7 million increase in the Business Research and Innovation Initiative and a $100 million advanced manufacturing fund to help companies diversify.
However, the start-up community feels that the budget lacked funding for entrepreneurs, despite the government’s National Innovation and Science Agenda. Nazar Musa, CEO of Medical Channel, said that “Any focus on start-ups would have supported tech entrepreneurs, or at least slowed down potential talent leaving Australia and going to the States or Europe. Now, without any further government support, this talent may not come back.”
Furthermore, Tony Wu from Weploy commented that “If we want to create businesses of global scale, global reach and solve global problems, we need to create much stronger policies to support this. This budget shows how much tech is talked about but not properly backed up. We need more action, and action means cash.”
Since its introduction in 2011, the R&D Tax Incentive has brought more R&D investment to Australia, which has strengthened industries and created skilled jobs. To see whether your company qualifies for the R&D Tax Incentive, contact Ausgrant for a free assessment.
Tags: federal budget, R&D tax incentive
