Labor pushes R&D tax incentive revamp

Labor has outlined proposed changes to the RD tax incentive that it says will promote collaboration between industry and research institutions.

The party said today that it would change the program objectives of the RD Tax Incentive scheme to make boosting collaboration between businesses and research institutions an explicit goal.

Labor has a target of 3 per cent of Australia’s GDP being put towards RD by 2030.

“Under Labor’s reforms, firms that collaborate with researchers in universities and public research agencies to create new knowledge will be eligible for a 10 per cent premium,” the party said in a statement.

Businesses would be able to claim the premium in a manner of ways, including working with universities or the CSIRO on product development, embedding industry researchers within a university, and hiring PhD students or recent graduates

The “start-up and software sectors have lost confidence” in the RD incentive scheme, Labor claimed.

A government-commissioned 2016 review (PDF) of the incentive recommended the introduction of a “collaboration premium of up to 20 percent for the non-refundable tax offset to provide additional support for the collaborative element of RD expenditures undertaken with publicly-funded research organisations.”

Collaboration is not currently an objective of the RD incentive program, the review noted.

The low level of RD collaboration with publicly funded research organisations may “be a contributor to the relatively poor commercialisation outcomes recorded in Australia compared with other economies,” the report said.

“Greater encouragement for public-private collaboration with business RD is likely to improve the translation and commercialisation of the basic research they undertake.”

The RD tax incentive was established in 2011. In 2017 the Australian Taxation Office (ATO) warned that businesses were claiming the RD tax incentive for ineligible software development work. In March 2019, the Commonwealth Bank revealed it had reached an agreement with the ATO over two years of RD claims.

Digital skills hubs

Labor yesterday said it planned to invest $25 million on a network ofregional digitalskills hubs. The hubs will “particularly target groups shown to bedigitallyexcluded, such as older Australians, Indigenous Australians, people living with disability and the long-term unemployed”.

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