ANNOUNCEMENT 08 May 2018

The Australian Government announced the modification of the R&D tax incentive introducing several changes that affect both small and big companies.

NUMBER OF INTERVENTIONS

1

  • 0 harmful
  • 1 neutral
  • 0 liberalising

SOURCE

Ministers for the Department of Industry, Innovation and Science. Media Releases. "Budget 2018 - New opportunities and jobs for Australian industry2 of 8 May 2018. available at: https://www.minister.industry.gov.au/ministers/cash/media-releases/budget-2018-new-opportunities-and-jobs-australian-industry

Budget 2018-19. Reforming the R&D Tax Incentive. Available at: https://www.budget.gov.au/2018-19/content/factsheets/6-tax-integrity.html

Inception date: 01 Jul 2018 | Removal date: open ended

Tax or social insurance relief

On 8 May 2018, the Ministers of the Department of Industry, Innovation and Science of Australia announced changes on the R&D Tax Incentive introduced in the 2018-2019 budget.

Particularly, the new framework introduces the following changes:

  • Introduction of an annual cap at ARS 4 million on cash refunds for R&D claimants with aggregated annual turnover less than ARS 20 million except for clinical trials. Cash refunds were uncapped prior to this change.
  • Modify the refundable R&D tax offset rate in companies with an annual turnover of less than ARS 20 million eliminating the flat rate of 43.5% and setting variable tax offset based on adding 13.5% to the prevailing corporate tax. In the case of bigger companies, the discount rates will depend on the proportion of annual budget destined to R&D (the higher the proportion, the higher the tax offset);
  • Increase of the ARS 100 million R&D expenditure threshold to ARS 150 million for large companies.

These changes apply from 1 July 2018.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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