BDO urges government not to tinker with R&D tax incentive
The R&D tax incentive is a critical mechanism and should remain industry agnostic, BDO has said.
With the government recently commencing a review to examine Australia’s research and development (R&D) system, BDO has raised concerns about the review’s intent to align R&D activities with government priorities.
The government announced the terms of reference for its strategic review of Australia’s research and development performance earlier this month.
The review would focus on maximising the value of existing investment in R&D, strengthening linkages between research and industry and supporting the achievement of national priorities.
It would also focus on driving greater R&D investment and uplifting Australia’s overall R&D intensity.
BDO national leader of R&D and government incentives, Nicola Purser, said BDO welcomed the intent of the review to increase business expenditure on research and development.
However, the firm had concerns with the intent to align R&D activities with government priorities.
“While the review terms suggest that it will look at the broader R&D system, further commentary in the media suggests it will involve a closer look at the R&D Tax Incentive,” Purser said.
“We believe the R&D Tax Incentive is generally working as intended and would be very concerned if there was any move away from the industry agnostic nature of the program. R&D tax incentives have become the leading mechanism for supporting R&D by Organisation for Economic Cooperation and Development (OECD) countries.”
Purser said there was ample evidence that R&D tax incentives create spillover benefits for the greater economy and provide a positive return on investment.
“In Australia, the R&D Tax Incentive is the key mechanism to support R&D intensity. It is also a key mechanism for encouraging globally mobile companies to conduct R&D in Australia in the face of competition by other OECD nations,” she said.
Chair of the review, Robyn Denholm, previously said her objective for the review would be to unlock the immense potential of Australian research by turning it into tangible outcomes that deliver both economic and societal benefits.
“Drawing on my experience across the global and Australian business sectors, I aim to help shape R&D settings that enhance our global competitiveness and secure our nation’s future prosperity,” Denholm said.
“I look forward to working with the phenomenal committee members, the government and stakeholders to deliver a framework that supports a stronger, more innovative Australia for decades to come.”
Minister for Industry and Science, Ed Husic, said it had been almost 20 years since R&D performance was examined, despite Australia having seen an alarming slide over the last decade.
“We said after the pandemic we would boost our manufacturing self-sufficiency,” Minister Husic said.
“That is a big challenge, but Australian know-how can help us do things smarter, sharpening our edge against international competition.
Minister Husic added that the Albanese government’s $23 billion Future Made in Australia plan was a critical investment in building up Australia’s industrial muscle.
“We’ve got to back up that investment with a world-class R&D system that will deliver more firepower from our boardrooms and labs so we can compete with the best in the world.”
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