Labor pushes R&D tax incentive revamp

Labor pushes R&D tax incentive revamp

Proposes change to tax incentive to boost collaboration with research institutions

Labor has outlined proposed changes to the R&D tax incentive that it says will promote collaboration between industry and research institutions.

The party said today that it would change the program objectives of the R&D Tax Incentive scheme to make boosting collaboration between businesses and research institutions an explicit goal.

Labor has a target of 3 per cent of Australia’s GDP being put towards R&D by 2030.

“Under Labor’s reforms, firms that collaborate with researchers in universities and public research agencies to create new knowledge will be eligible for a 10 per cent premium,” the party said in a statement.

Businesses would be able to claim the premium in a manner of ways, including working with universities or the CSIRO on product development, embedding industry researchers within a university, and hiring PhD students or recent graduates

The “start-up and software sectors have lost confidence” in the R&D incentive scheme, Labor claimed.

A government-commissioned 2016 review (PDF) of the incentive recommended the introduction of a “collaboration premium of up to 20 percent for the non-refundable tax offset to provide additional support for the collaborative element of R&D expenditures undertaken with publicly-funded research organisations.”

Collaboration is not currently an objective of the R&D incentive program, the review noted.

The low level of R&D collaboration with publicly funded research organisations may “be a contributor to the relatively poor commercialisation outcomes recorded in Australia compared with other economies,” the report said.

“Greater encouragement for public-private collaboration with business R&D is likely to improve the translation and commercialisation of the basic research they undertake.”

The R&D tax incentive was established in 2011. In 2017 the Australian Taxation Office (ATO) warned that businesses were claiming the R&D tax incentive for ineligible software development work. In March 2019, the Commonwealth Bank revealed it had reached an agreement with the ATO over two years of R&D claims.

Digital skills hubs

Labor yesterday said it planned to invest $25 million on a network of regional digital skills hubs. The hubs will “particularly target groups shown to be digitally excluded, such as older Australians, Indigenous Australians, people living with disability and the long-term unemployed”.

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Tags R&DtaxationElection 2019

More about AustraliaAustralian Taxation OfficeCommonwealth BankCSIRO

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