Key Takeaways
- • Australia's Labor government introduced legislation on Tuesday overhauling the R&D tax incentive, raising higher credit rates while retaining the increase in minimum annual eligible expenditure from $20,000 to $50,000.
- • The bill removes eligibility for supporting R&D activities and generally cuts off refundable credits once a business has been operating for 10 years, a provision the Tech Council of Australia calls "a serious problem for tech firms."
- • The changes would apply to income years beginning on or after 1 July 2028, with ministers gaining power to recognise additional activities after a government consultation next year.
- • Startups' objections were largely preserved in the final legislation, according to the primary source, which notes the bill also omits much of the support proposed by the government's own expert review.
Summary
Australia's startup ecosystem is reacting with frustration after the government introduced its R&D tax overhaul legislation on Tuesday. According to Capital Brief, companies that spent months voicing objections to the proposal found that the measures they opposed were retained in the bill.
Kate Cornick, chief executive of the Tech Council of Australia, welcomed the higher tax credit rates in the bill. She said, however, that the removal of supporting R&D activities and the introduction of a general 10-year age limit for cash refunds remain "a serious problem for tech firms." Cornick told Capital Brief that "innovative companies are deciding every day whether to build and make substantial R&D investments in Australia" and that "they need certainty to do that."
The legislation keeps the increase in minimum annual eligible expenditure from $20,000 to $50,000. It also removes eligibility for supporting activities and generally cuts off refundable credits once a business has been operating for 10 years. The changes would apply to income years beginning on or after 1 July 2028.
The bill would give ministers the power to recognise additional activities integral to conducting R&D. However, the government will consult next year on which activities to include, leaving companies uncertain about which currently eligible costs they will still be able to claim. The primary source notes that the bill omits much of the support proposed by the government's own expert review.
Kate Cornick, chief executive of the Tech Council of Australia, welcomed the higher tax credit rates in the bill. She said, however, that the removal of supporting R&D activities and the introduction of a general 10-year age limit for cash refunds remain "a serious problem for tech firms." Cornick told Capital Brief that "innovative companies are deciding every day whether to build and make substantial R&D investments in Australia" and that "they need certainty to do that."
The legislation keeps the increase in minimum annual eligible expenditure from $20,000 to $50,000. It also removes eligibility for supporting activities and generally cuts off refundable credits once a business has been operating for 10 years. The changes would apply to income years beginning on or after 1 July 2028.
The bill would give ministers the power to recognise additional activities integral to conducting R&D. However, the government will consult next year on which activities to include, leaving companies uncertain about which currently eligible costs they will still be able to claim. The primary source notes that the bill omits much of the support proposed by the government's own expert review.
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