Call to give companies early access to R&D refund

Australian Manufacturing Forum member viewpoint by Kris Gale

With the world attempting to come to grips with the COVID-19 situation, it’s hard to find too many opportunities for good news but recent discussion regarding the R&D Tax Incentive is one of them.

As reported in @AuManufacturing news, the Senate Economics Legislation Committee (the Committee) is conducting a review into the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019.

Fourty five public submissions were received and are available on the Parliamentary website here.

The submissions strongly echoed widespread views that the second version of the Bill was virtually unchanged from the first version that was unanimously rejected by the Committee. Arguably, it was in worse shape with the changes to the intensity premium for Non-Refundable Offset claimants.

These views were set to be tested at a public hearing on Tuesday, 31 March at the Portside Centre in Sydney. At the time of writing, no programme has been published for the hearing and it appears unlikely to go ahead in the current environment.

And it’s that current environment that is fuelling demands for a fresh look at the Incentive.

At the forefront of the demands is the recommendation that Refundable Offset participants should be given the opportunity to make an early claim when a cash refund is likely to be owing.

For most companies, the concept would be a claim for expenditure in line with claims made for the previous year (presumably with a reconciliation as at 30 June).

What began as a thought bubble has quickly escalated into a petition set up by Catapult’s executive chairman, Adir Shiffman. It has more than 1500 signatories and the support of key Australian innovation voices including Melanie Perkins (Canva), Daniel Petre (AirTree Ventures) and Scott Farquhar (Atlassian).

Apart from the early payments option, the petition also calls on the Federal Government to suspend the Committee’s inquiry into the Incentive changes for at least six months and introduce a six-month moratorium on ATO clawbacks against recipients for the scheme who have payments owing as a result of audits.

The Incentive is an established funding mechanism that could deliver financial support to a vast number of Australian companies immediately. It’s what the Refundable Offset was set up for: to increase the chance of success (which right now translates as survival) of Australia’s innovators.

As Australia pulls together, the Incentive has a golden opportunity to more than do its bit.

Kris Gale is chairman of Michael Johnson Associates, a company focused on the direct delivery of R&D tax benefits to Australian companies from start ups to the very largest. He can be contacted on 02 9810 7211 or email [email protected]

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