Australia To Launch Improved Research Credit

by Mary Swire, Tax-News.com, Hong Kong

22 June 2011

The Australian Green Party has given its support to the federal government’s long-planned improvements to the research and development tax incentive, after the measure had previously been rejected by the Coalition in the Senate.

A joint statement issued by Treasurer Wayne Swan and Innovation Minister Kim Carr said that the AUD1.8bn (USD1.9bn) tax credit will deliver more funding to innovative firms, increasing productivity and Australia's national income.

“This builds on Labor's policy reform agenda of the past four years and will be a major benefit for businesses that innovate and use R&D as a platform for future growth," said the statement.

“Today we welcome crossbench Senators announcing their support which means the parliamentary road-block put in place by the Coalition will finally be removed,” the ministers added.

According to the government, the new and improved credit will target more funds to "genuine R&D deserving of public support," and will deliver a 45% refundable tax credit to companies with an aggregated turnover of less than AUD20m and a 40% non-refundable offset to all others.

“This will allow more firms to benefit from our massive boost to the innovation, science and research budget, helping them grasp the opportunities of our transition to a cleaner economy," the ministers said.

“We welcome the commitment of industry, the Greens and independent parliamentarians who have put good policy ahead of political posturing in supporting this reform,” the joint statement continued.

The development is the culmination of an extensive consultation and negotiation process.

Following discussions with the Greens, the government will introduce quarterly payments for small and medium businesses from January 1, 2014. These firms will get their credit sooner, so improving their cash flow and incentive to invest in R&D.

The scheme is due to start on July 1, 2011. An advisory group will be established through the Innovation Australia Board to monitor the implementation and operation of the Credit.

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