BDO strongly supports R&D Tax Incentive in issues paper submission

02 March 2016

The R&D Tax Incentive is “a well-constructed piece of legislation that encourages industry to undertake R&D activities that improve the competitiveness of Australian companies” according to BDO’s submission to the Federal Government’s issues paper.

BDO R&D Tax Partner Nicola Purser said she understood the Government’s desire to rein in costs, but hoped it would not be at the expense of weakening a successful programme.

“The R&D Tax Incentive achieves what it has been designed to– namely, encouraging companies to undertake research and development that otherwise might not occur,” Ms Purser said.
“Although there are a few areas where costs could be reduced, we believe the incentive should be retained as it is.

“In fact, we would suggest the continued growth of applicants is a sign that the incentive is – for the most part – working exactly as intended.

“Business requires certainty and many companies have made long-term plans based on the assumption that the R&D Tax Incentive would continue as it has since its introduction in 2011.
“To flag substantive change less than five years after its introduction without first investigating its effectiveness is deeply troubling.”

Ms Purser said BDO had made several recommendations that could help reduce the costs of the programme without weakening its effectiveness.

“Improving collaboration between publicly-funded research institutions and industry could substantially improve outcomes of the R&D Tax Incentive,” she said.

“The French system rewards industry partners for undertaking R&D projects in collaboration with public research organisations by allowing businesses to claim 200 per cent of the costs invoiced by public research organisations – that is something that could be introduced here.

“Bringing in systemic compliance rather than the current reactionary response could also help streamline the process and reduce costs.

“The current system places a substantial focus on the ‘requests for information' (RFI) and review meetings, placing an unnecessary administrative burden on AusIndustry.

“Given the high levels of compliance in the programme we believe a less risk-averse approach would be beneficial.”

BDO’s full submission can be found online at:
http://www.bdo.com.au/en-au/insights/submissions/tax/rnd-issues-paper