The ISA 2030 strategic plan was released yesterday.
This outlines 30 recommendations to strengthen Australia’s innovation performance through to 2030. We are pleased to see recommended increases to the Export Market Development Grant program. In addition, the plan recommended the below changes to the R&D Tax Incentive program. This follows the government commissioned Ferris, Finkel and Fraser (FFF) review of the R&D Tax Incentive program in September 2016.
Cap the cash refund amount at $4m per year for refundable claimants (with a cumulative refund of $40m per company)
A company must spend at least 1% of its total costs on eligible R&D in order to qualify. It would be a trigger event at which point, everything can be claimed.
They also re-iterated their support for the remaining FFF review recommendations, namely:
Maintain the current definition of R&D (activities and expenses) but develop new and improve guidance materials
A collaboration premium of 20% should be introduced for non-refundable claimants to engage universities and research institutions
Review options to improve the administration of the program.
None of these recommendations are guaranteed to become law. The government still needs to respond to the report and implement any changes through the traditional parliamentary processes.
One further interesting insight in the report was ISA’s view that only very limited innovative software development activities qualify for the R&D Tax Incentive. With new IT specific industry guidance expected from AusIndustry in the coming months, it will be interesting to see if ISA, AusIndustry and the ATO have changed their view of IT R&D activities since the program started in 2011. We will of course keep you updated with any changes as they develop.
To view the full report, click here.
For more information, please contact Travis Maddox or your ShineWing Australia representative.
Associate Director - R&D Tax and Government Incentives, Tax
T +61 3 8635 1800
E [email protected]