R&D Tax scheme gets a makeover

James Riley
Editorial Director

The federal government may still be pondering a formal response to the ‘Three F’ review of the R&D Tax Incentive that concluded nearly 18 months ago, but it has embarked on a plan to help make the scheme easier to understand.

It continues to make headway in improving the accessibility to a scheme, which many small businesses and startups have not previously understood, or were unaware they were entitled to.

The Department of Industry has announced plans to simplify the language and develop better processes to help tech companies better understand how to access the R&D tax scheme.

Arthur Sinodinos: Announced a plan to make it easier to understand R&D Tax Incentive eligibility

The department will work with a range of IT companies to pilot a system over the next several months to help businesses more easily work out whether the work they are doing qualifies for a concession or not.

Advocacy group StartupAus’ chief executive Alex McCauley has commended the government’s effort to assist companies in more clearly interpreting R&D tax scheme.

“If this means more startups can confidently make independent R&D tax incentive claims, that’s going to mean more money flowing to jobs in R&D rather than tax advisers. That would be a good outcome for the program overall,” Mr McCauley said.

TechSydney chief executive Dean McEvoy said any move to simplify the process of administering the R&D grants is good.

“We need to move toward a simple process that is clearly understood by the applicants,” he said.

Mr McEvoy suggested a preliminary assessment built into the R&D application process would also be another way government could look at improving the process.

“This could provide an initial green light that an application complies and give startups more assurance that they are likely to receive the grant,” he said.

“Audits can be an enormous and costly business disruption for startups. It would also be good to try to minimise the expense that can occur if an application is scrutinised.”

However, Mr McCauley warned that this move by the government is only just a guidance to how businesses can access the scheme pointing out the real question at hand is what is the government’s response to the review of the scheme itself.

“We’re still waiting to see how the government responds to the review…which it received almost 18 months ago,” he said.

The ‘Three F’ review panel into the R&D tax credit scheme chaired by Bill Ferris, Alan Finkel and John Fraser concluded in April 2016, was release for public comment in September 2016 and the government was supposedly schedule to have given its response to the recommendations by the “early 2017”.

A spokesperson for Industry Minister Arthur Sinodinos reiterated that it is still considering the recommendations made in the review and will provide a response once those considerations are completed.

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