Senate looking to make a $1.8B cut to innovation and tech sector
Canva and Atlassian are fighting to save the R&D Tax Incentive as a methodology to promote innovation .
Instead of the proposed changes – to cut incentives for innovation amounting to an estimated $1.8 billion, the government should look to several “immediate, interim measures” to stimulate the growth of Australia’s innovation economy, both Atlassian and Canva argued.
The federal government’s planned changes to the research and development tax incentive, is planned to go before a Senate committee to approve the controversial reforms – that could kill innovation incentives for much of the Technology and Startup Sector and harm Australia’s economic recovery from the COVID-19 recession.
Atlassian’s Scott Farquhar said the RDTI is “more important than ever” in the wake of COVID-19, and the proposed reforms would damage the scheme for most companies.
Scott goes on to say that research and development – including software R&D – sits at the core of Australian innovation and is vital to its future in a global knowledge economy – and the RDTI is the most significant program available to Australian companies to incentivise innovation.
The changes to how the RDTI scheme applies to companies with annual turnover under $20 million would lead to a “significant decrease in refundable R&D offsets for Australian startups”, Canva chief financial officer Damien Singh said in a submission.
The Government should look to increase support for R&D “with reference to the higher tax incentives available in other OECD countries”, the tech companies said.
“Small-medium enterprises will require additional financial support due to COVID-19 and losing access to previously budgeted refundable R&D tax offsets will further reduce their ability to invest in needed innovation within Australia,” he said.
“We see research and development as fundamental to furthering Australian innovation and to growing the Australian economy, especially post-COVID. In this continually evolving COVID crisis, the incentive is more important than ever to the recovery of the Australian economy.”
The Senate Committee is due to hand down its report on the RDTI changes on Monday, after several delays due to the COVID-19 pandemic.