Government rules out fix to R&D tax concession

Industry minister Karen Andrews has all but ruled out reform of the trouble-plagued tax concession system for R&D.

The system has been in limbo with the government’s preferred reforms, which cut $2.4 billion from the scheme, stalled in Parliament, and the industry department and courts at odds over interpretations of the scheme.

In an interview with Andrews ruled out changes to the definition of R&D that receives the concession, only pledging to streamline administration.

She said: “I am working very closely with the department and they have been specifically tasked with coming up with ways to improve the administration of the R&D tax incentive.

“It is pretty clear that has been one of the issues, that many firms have not been clear about whether their work would be approved under the (scheme) or not.”

This statement is unlikely to satisfy businesses which have received preliminary approval for the R&D they perform from AusIndustry, only to have the tax office step in and disallow a claim.

The current narrow definition of what constitutes R&D followed by Canberra has also been overturned by the courts in at least one case.

With industry uncertain about definitions of R&D, government legislation stalled, and the response only administrative, this saga is not yet over.

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