Last month I shared my concerns on the proposed R&D amendments – please refer blog link below.
It is not often in tax that we get good news – but this time we have. On 2 March, the Senate removed the proposed R&D rate reduction from the Tax and Superannuation Amendment (2014 Measures No. 5) Bill 2014 which had sought to reduce the R&D tax offset by 1.5 percentage points.
This would have taken the non-refundable 40 percent tax offset down to 38.5 percent (a 15 percent reduction in the permanent tax benefit) and the refundable 45 percent tax offset to 43.5 percent (a 10 percent reduction in the permanent tax benefit.
Best not to get too carried away just yet – it is possible that the Government’s proposals could return in two months in the Federal Budget. However, it is hoped that at the very least, any proposal to reduce the rate again will be coupled with a reduction to the corporate tax rate such that tax payable claimants are not worse off.
As I explained in the blog last month, it is the largest companies – the ones which will be hit hardest by the $100m limit – which often invest in riskier, radical R&D and involve significantly higher costs. A key point to note is that companies that have this level of R&D expenditure generally engage with smaller companies, universities and/or research bodies to undertake work for them. This means that important engagement with the broader community would be at risk.
Read the original blog here
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