April 9, 2019 by Ben Thompson
The Coalition released their antipathetic Budget for 2019-2020 a week ago. The delay in our response reflects the fact there is no news or anything of substance or relevance to our clients or focus of work.
There were no changes to R&D Tax funding … zero, zilch. The definition of R&D has not changed since 2012 when the incentive first launched. The administration of the programme and Government’s interpretation of what constitutes eligible R&D has also not changed during this time.
The only mention of R&D in the Budget was a revision of estimates, which makes assumptions that spending would go down due to there being fewer applicants in 2019-20. Budget papers made no indication on what basis these assumptions are made. Using scare tactics around perceived uncertainty with the programme to dissuade companies from submitting applications is the only lever this government feels competent to use.
Despite the no-change, there are articles doing the rounds that talk-up disaster for the R&D programme. They mention a $4B cut in the last year, and a maximum cap of $4M for the cash rebate… but quoting those as fact and current news is misleading. Proposed changes to legislation, that were proposed after a ‘review’ of the programme, have been put aside for further discussion and have not received royal assent.
Further to that, the cap at a maximum of $4M for cash rebates, which whilst sounding impressive with the big numbers – would only impact companies with <$20M turnover and that are in loss and are spending >$10M on R&D in a financial year. This would be relevant to a handful of applicants in biotech and literally zero companies with ICT-based claims.
There was a haircut to the programme; but that came last year when the rates for R&D benefit were trimmed to effect a zero-sum gain when balancing the reduction in company tax rates – but did mean that companies which are in loss now receive less money than when the programme first launched.
There was a minor announcement in the budget for export grants – with the government announcing an additional $60M to fund the program. This $60M is across three years and comes into effect only for FY20 claims. The current shortfall in that programme is $60M a year.. so even there money is short with the government continuing to fail to fully support not only creators and makers, but also exporters.
The only real news is that the annual R&D Registration deadline is quickly approaching. You’ve got until 30 April to submit a technical description of your experimental activities. Reach out if you need help to get things across the line.