R&D Tax Incentive: Senate Committee recommends deferring R&D changes

On 11 February 2019, the Senate Economics Legislation Committee recommended deferring proposed reforms to the R&D Tax Incentive until further analysis and refinement can be undertaken.

The Committee issued its report on the reforms contained in Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018, recommending:

  • refinement of the proposed $4 million cap on R&D tax refunds. The Committee noted the retrospective nature of the change would unduly impact business which have already made R&D investment decisions based on the existing R&D Tax Incentive framework; and
  • deferring the introduction of a R&D intensity premium for large companies until further analysis on the impact can be undertaken. The Committee highlighted the inherent differences in R&D intensity across industries and the effect an intensity premium would have on businesses with large operating costs.

What’s next?

Treasurer Josh Frydenberg has confirmed the government’s intention to accept the Committee’s report and defer the proposed reforms to the R&D Tax Incentive legislation.

With the government accepting the Committee’s recommendation to defer the legislation, it remains to be seen what changes lay ahead for the R&D Tax Incentive post the April Federal budget and the May Federal election.

For more information relating to this article or to speak with an expert about your business and the R&D Tax Incentive program, please contact amolloy@moorestephens.com.au

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