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‘Core of Australia’s success’: Calls for clarity on R&D approach

In February, a Senate committee reviewed the changes and recommended impacts on startups be reviewed further before it was implemented. This week, the government committed to revisiting the changes but the timeline was unclear.

“The Senate Economics Committee found that R&DTI reform is needed and we agreed with the committee’s recommendations regarding technical refinements, and that work is underway,” Treasurer Josh Frydenberg said in a statement to The Age and Sydney Morning Herald. 

Startups feel anxiety about the policy for two reasons. Without knowing how the reforms will progress, it is difficult for them to know whether the limits of the scheme will change in the near future.

The rules about which activities are eligible as claims are also complex, with entrepreneurs such as Mr Wilson saying it is difficult to work out a claim without employing expert help.

“It’s complex enough that you have to pay consultants quite a bit of money to claim it,” he said.

Investors believe there hasn’t been clear enough messaging about the path of future reforms.

Australian Investment Council chief Yasser El-Ansary said: “One of the smartest things the [government] could do to provide some direction and certainty to investors is to come forward now and say with clarity how they intend to progress on this particular area of reform.”

Peak body StartupAus said the situation makes it difficult for companies to plan for the long term.

“The R&DTI is at its best when it is operating in a reliable and predictable nature, when founders can be sure that investing in research and development yields a corresponding subsidy,” StartupAus chief operating officer Alex Gruszka said.

Senator Kim Carr grilled the department of innovation in senate estimates over how it deals with companies in the R&D tax incentive program.

Senator Kim Carr grilled the department of innovation in senate estimates over how it deals with companies in the R&D tax incentive program. Credit:Alex Ellinghausen

Concerns have also previously been raised around the process by which the Tax Office and AusIndustry can go back to review claims made by businesses in previous years, with gig economy platform Airtasker one business whose claims from previous years have come under the microscope.

“We believe that small businesses and startups are really important to creating jobs and the retrospective auditing and clawing back of R&D incentives – based on guidelines which have been changed after R&D submissions were previously approved – is likely to stifle Australian small businesses and result in significant job loss,” Airtasker co-founder Tim Fung said.

Labor Senator Kim Carr, who was on the Senate committee which reviewed the government’s reforms, said: “Since the election we have seen a series of Australian and overseas reports that all demonstrate how Australia’s overall innovation and research and development is failing and the negative impact that is having on the country’s economic and social performance.

“The issues and concerns industry raised in the Senate inquiry have still not been addressed by the government. The government’s changes are still on the books and the changes are due to take effect from July 1, 2018.”

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