Australian Financial Review: Fielding gets last word on R&D – Page 18

You may have seen Krish Patel of Moore Stephens quoted in today’s AFR regarding the status of the Federal Government’s proposed R&D Tax Bill. The Bill’s fate currently rests with Family First Senator Steven Fielding. 

Overall, notwithstanding there will be some teething issues and possible amendments going forward, in our view, the R&D Bill is a step in the right direction to ensure that Australia becomes a leading innovator nation and economy.

The proposed Bill has demonstrated to the SME sector that there is real Federal Government commitment to increase genuine R&D in Australia. Globally, Australian companies are facing increased competition from a resurgent China and other countries with more lucrative R&D regimes, now the playing field has been levelled. The winners are the SME, Venture Capital and Biotech sectors.

The ‘doom and gloom’ talk of a R&D exodus out of Australia as result of the tightening of the definition of R&D has been blown out of proportion. Large corporates look at the big picture, including skills, labour, etc. R&D is just one element.

Further, Krish Patel believes that the Bill will not breed a ‘chindogu’ R&D culture as firms will always acquire new knowledge and for a specific application or use, but will most likely have the opposite effect. (Chindogu is the Japanese word coined for the art of the useless ideas).

Definition of R&D

The tightened definition of R&D brings us closer to the UK and US model with an increased emphasis on ‘true’ innovation rather than a ‘subsidy for innovation’ as most firms only innovate due to commercial and market pressure. The new R&D regime is trying to balance this with an ethos of rewarding risk taking.

SME Sector

Given SMEs and start-ups are generally the ‘hotbed’ of new ideas and creativity, the R&D bill will foster an innovative culture and as a nation we will benefit from their R&D activities. This is especially important given in the current competitive environment as Australia can really only compete with high value, low volume products and innovation.

Way forward

If you would like to discuss the proposed R&D Bill and possible amendments or would like assistance with any R&D or other indirect tax matters, please call:

Contact

Krish Patel
Indirect Tax Practice Group Leader
T +61 2 8236 7700
kpatel@moorestephens.com.au

www.moorestephens.com.au