The Coalition proposal is to review access to R&D tax support and examine the potential for creating a second stream of the R&D tax incentive based more closely on the eligibility criteria of the former R&D tax concession. Further, they will examine the potential applicability of the ‘patent box’ models implemented overseas, including in the United Kingdom.
Having proposed a review for the R&D tax incentive, the implementation of two measures previously scheduled by the former Labor Government for the 2014 year, remains unclear at this time. These were:
- removing access to the R&D tax concession for those company groups with Australian turnover of $20 billion or more which was due to commence from 1 July 2013.
- providing quarterly payments of the refundable tax offset to small companies with grouped turnover of less than $20 million, due to commence 1 January 2014.
On a positive front, the proposed reduction in the company tax rate from 1 July 2015 would result in improved benefits under the current R&D tax incentive programs. Companies will remain entitled to 40 percent or 45 percent tax offsets creating a larger difference between that offset and the proposed rate of 28.5 percent. This will enable companies to further invest in R&D and productivity improvements.
KPMG will keep you apprised of news relating to the R&D review. In the interim we recommend you take a 'business as usual' approach.