Posted By: R&D SmartTax

Australian taxpayers are still in limbo over the Federal Government’s proposed R&D Tax Credit with the bill now looking like it is unlikely to be passed until late January/early February next year. 

This means Australia’s innovation community is no closer to knowing if the start date will be retrospectively applied to 1 July 2010 and also what form the controversial bill will finally take. 

The proposed feedstock and “dominant purpose” tests have been hotly debated by industry with many analysts predicting their introduction will lead to a significant decline in reported Business Expenditure on Research and Development similar to the drop seen after changes in 1996.

 Senior parliamentary members are echoing calls by businesses to view economic modelling on the proposed changes. So far the Federal Government has not produced any modelling on the new R&D Tax Credit leading to further concern about its future effect on Australian innovation. 

Businesses used to experiencing inconsistent interpretation of the current well-known R&D rules by Innovation Australia’s AusIndustry review teams are also nervous about how the proposed rules will be interpreted going forward.  One comment leaked by an insider suggested there was an intention to push the legislation through in its current format and then run a series of ATO test cases to let the courts interpret the new rules.  Such comments are only fuelling the concerns companies are having about the new R&D Tax Credit and whether the Australian Federal Government is serious about supporting business innovation here.  In wake of all this uncertainty, how 2010 shapes up for Australian innovation remains to be seen.

Our recommendation is to take advantage of this limbo by bringing forward innovation spending to the current 2011 financial year where possible. Current R&D rules are well known bringing an extra amount of certainty to R&D tax claims made in the 2010 and 2011 financial year. 

To take advantage of the current status and claim your rightful tax refund, use R&D SmartTax’s R&D Eligibility Wizard and R&D Application Wizard. Both tools eliminate months of work in the R&D tax claim process. The R&D Eligibility Wizard helps companies to easily self-assess their eligibility and the R&D Application Wizard is a one-step tool that also completes the official application form for easy lodgement at tax time. Both tools have been created for the current R&D Tax Concession and R&D Tax Offset programs with the new R&D Tax Credit to be covered once enacted.

(This article by Caroline Hughes from R&D SmartTax recently appeared in the TranZition Report published by biotechnology and emerging technology recruitment specialists TranZition

About R&DSmartTax

R&D SmartTax tools were born out of a desire to help the many smart small Australian companies access the R&D Tax Break benefits without the need for hours spent reading tax literature or expensive consultant fees. The R&D Eligibility Wizard is designed to be low cost, easy to use and available for all Australian industries.


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A. Blauensteiner
Australian Institute of Commercialisation

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