Call for transitional arrangements for Australia’s R&D Tax incentive cap

The passage of unwelcome legislation last week to cap claims on the Australian Research and Development (R&D) Tax incentive and its retrospective application to July 1, 2014, has prompted calls for the government to provide transitional arrangements for biotech companies abandoned in a difficult position, according to trade group AusBiotech.

The Tax Laws Amendment (Research and Development) Bill 2013 was initially introduced by the federal government to exclude companies with a A$20 billion ($15.5 million) turnover from accessing the R&D Tax Incentive, but in a last-minute shock deal, an amendment put by the Palmer United Party was agreed and passed to cap claims at a a$100 million of expenditure.

AusBiotech said today that the change was significant for the Australian innovation ecosystem and will impact many more companies than was originally intended, large and small. It also capped claims retrospectively to include the current tax year, more than half-way through the financial year.