Proposed R&D Tax Incentive amendments postponed and under new scrutiny

Around every cloud there’s a (possible) silver lining: Proposed R&D Tax Incentive amendments postponed and under new scrutiny.

Earlier in February, the Senate Economics Legislation Committee released its report on proposed changes to the R&D Tax Incentive. The report recommended that the Senate defer consideration of the Bill until further examination and impact analyses were undertaken.

Given that a Federal Government election is due in the first half of this year, it is a fairly certain call that any changes to the R&D Tax Incentive would only be considered and occur after that election.

Contentious issues particularly recommended for review include the retrospective application of the provisions and the R&D Intensity test.  Submissions made to the Committee were overwhelmingly critical of the proposed measures, but also included many recommendations for improvement to the R&D Tax Incentive, particularly in relation to software and IT-related R&D.

At this stage, it remains a ‘watch and see’ approach. As time progresses, the potential for any retrospective application to years of income that would have come to an end at time of tabling any new proposed legislation (e.g. FY2019) would be expected to diminish.

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