The Australian Senate has blocked planned changes to the R&D Tax Incentive program which would have reduced reduced research and development tax breaks for all companies by 1.5%
The R&D Tax Incentive reduction, which would have been applied retrospectively from July 1, 2014, was included in The Tax & Superannuation Laws (2014 Measures No. 5) Bill 2014, was budgeted to provide a $620m saving over four years.
However, the Labor opposition and the Australian Greens proposed an amendment to the Bill to omit the tax cut, which was passed in the Senate late on Monday night.
The R&D Tax Incentive, which is a targeted entitlement program that helps businesses offset some of the costs of doing R&D,
Australia’s Shadow Minister for Higher Education, Research, Innovation and Industry Senator Kim Carr said small to medium enterprises (SMEs) would have been “savaged” by the government’s proposal, as SMEs make up more than 70 percent of the users in the R&D tax offset scheme.
He said some of Australia’s biggest R&D investors – including companies such as Cochlear, CSL, Telstra and Caltex – had made it clear that reducing the R&D Tax Incentive would cost jobs.
“Without a strong innovation system, Australia cannot build a more diverse economy, and if we do not build a more diverse economy, we cannot protect living standards and we cannot ensure that prosperity is spread throughout our population,” Senator Carr said.
Greens deputy leader Adam Bandt said the Senate’s rejection of the R&D Tax Incentive cuts was a “big win for science and research and a big win for business”.